Edward Miliband: My hon. Friend is absolutely right. We all need diversions from temptation, and it is very important that the Mothers' Union is providing them. My hon. Friend also makes a serious point about the diversity of the activities in which third-sector organisations engage, helping people in innumerable different ways. We want to find ways of encouraging that. Governments do not create the dynamism that comes from organisations like the Mothers' Union, but they can help, and that is the point of the small-grants programme that we have announced today.

Edward Miliband: I know that the hon. Lady takes a close interest in voluntary-sector issues, and she is right to say that we need to do what we can to encourage young people to volunteer. That is the point of the arm's length organisation v, funded but not run by Government, which is creating new volunteering opportunities for young people all over the country. It has created 200,000 so far, and is on the way to creating a million.
	As the hon. Lady says, we need to encourage that culture of volunteering among both young people and middle-aged people, among whom I count myself. She will be pleased to learn that v is doing that, and I hope that it will be doing some work in her constituency.

Julie Morgan: Does my right hon. Friend agree that those in the voluntary sector have been pioneers in developing policy and helping the Government to do so? I am thinking especially of the hospice movement. Is my right hon. Friend aware of the work of George Thomas hospice in my constituency, which of course is named after a former Speaker?

Edward Miliband: I have never been a hustler, and I am not about to start now. As for the question of individual charities, it is a matter for the Charity Commission and not for me.
	The issue of campaigning by voluntary-sector organisations is a live issue between those on the Front Benches. Our position is clear: we believe that third-sector organisations should be able to campaign for changes in the law in support of their charitable objectives. They have told us that the guidance is unclear, which is why we are pleased that the Charity Commission is rewriting its guidance.
	I find it sad that the hon. Gentleman is, in a way, engaged in a personal crusade to return to the position held by the Conservative party in the 1980s—one of hostility to campaigning by the voluntary sector. We want never to return to those days, and I hope that the hon. Gentleman will see reason.

Edward Miliband: My hon. Friend raises a big challenge for Government, and it is important that we meet it. Let me briefly say something about the way the scheme will operate. The money will be distributed by the Community Development Foundation not centrally to local organisations in his constituency, but to local partner organisations who know the circumstances on the ground. We hope that by the middle of next year, when those partners have been chosen, organisations such as those in my hon. Friend's constituency will be able to apply for the money. I hesitate to say this, but we will make good on this promise: there should be as light a touch as possible in the application process, because that approach is incredibly important for the smallest organisations in the country.

Francis Maude: One of the Cabinet Office's key responsibilities across government is for information security. In June, it received the Coleman review of Government information assurance, which stated in clear terms that
	"adequate mechanisms are not yet in place".
	Will the Minister tell us which Minister in the Cabinet Office read that report and what steps were taken in response to it?

Gillian Merron: It might help if I were to remind the House that we are the first Government to publish a climate change Bill, and I hope that we will be given full support on that. It would also be useful if we were to remind ourselves that the Cabinet Office's role is to support Cabinet and Cabinet Committees—that includes a range of issues—to co-ordinate emergency and crisis response, and to strengthen the civil service's capability. We are talking about the National Audit Office, so perhaps I could do no better than to quote its recent report about the Cabinet Office. The report said that in helping to meet targets on the Government's programme of priorities, the Cabinet Office has
	"an effective system for measuring other departments' progress in achieving their PSA targets."
	I am sure that the hon. Gentleman will be pleased to hear that.

Edward Miliband: The hon. Gentleman is right to say that the issue of substandard housing is important. I believe I am right in saying that since 1997, 1 million children have been taken out of substandard housing through the investment that we have made. I hope that he will support our plans to build 3 million homes over the coming years. I am afraid that some councils—obviously this is not a party political point—oppose those measures. I hope that he will join us in pledging to build 3 million homes over the coming years.

David Taylor: Is it not the case that many thousands of low-income families in this country do not have cars and live in isolated communities where there is poor public transport? They have some access to financial services through post offices, but they will no longer have that access in the months to come. Will the Minister have a word with his ministerial equivalent in the Department for Business, Enterprise and Regulatory Reform, particularly in respect of tightening up the framework on closures where the post office is the only shop in the village? Such closures will plunge thousands of families into social exclusion.

Edward Miliband: The consultation on local post offices is ongoing, and I know that we subsidise those offices to the tune of some £150 million a year. The other point that my hon. Friend makes is about the quality of bus services needed to get people to where they want to go. That is why the Local Transport Bill is so important, because it will improve bus services significantly outside London.

Gary Streeter: Are not some of the families most at risk from social exclusion those who have to deal on a daily basis with the Child Support Agency and Her Majesty's Revenue and Customs on tax credits? This is not a political point, but is there anything that the Minister can do to improve the bureaucratic performance, especially of HMRC, so that families that are already hard pressed financially do not also have to suffer the stress of grappling with that faceless bureaucracy week in, week out, which only adds to their many difficulties?

Phil Hope: I am happy to join my hon. Friend in congratulating SHAID in his constituency. He is right: peer volunteering—young people helping other young people—is an important and constructive approach. I know that he plays a big role as a local champion of such projects in his constituency. The record investment is helping young people not only to help the community, but to help themselves. Those who volunteer get a huge amount out of the contribution that they make. Perhaps other MPs might follow my hon. Friend's example and take the opportunity of this time of year to send a message of thanks and congratulations to charities and third-sector organisations that will be working really hard to support some vulnerable people in our communities.

Peter Bottomley: In addition to the Government's volunteering initiatives, could the Minister encourage all his colleagues and all right hon. and hon. Members to recognise the role of the cadet units in the armed services and the emergency services? Will he give encouragement to people to join youth organisations such the Boys' Brigade, the Guides, the Woodcraft Folk and so on, and later become assistant leaders and instructors? Will he also encourage the Department for Children, Schools and Families to have positions of responsibility at all ages in schools so that pupils get used to organising themselves and others, and then go on to join the more normal volunteer organisations?

Shona McIsaac: Last Saturday night, I was invited to watch 150 young men take part in a football tournament organised by Sport Lincs with the aim of reducing antisocial behaviour. They want to encourage those young people to become volunteer coaches so that the campaign can continue. Can my right hon. Friend tell me what funding is available for such projects?

Phil Hope: I can give my hon. Friend some good news. The train to gain programme, which will now include skills funding for volunteers, will make a huge difference. The Sunlight Development Trust—one of more than 400 development trusts with more than 15,000 volunteers—will greatly benefit from those resources. My hon. Friend hosted a reception in the Commons where those trusts presented him and other MPs with awards. They described him as a committed and hard working constituency MP, who was approachable, honest and truly committed to social justice and working with the most vulnerable. I could not agree with them more.
	I can only say that I agree with the organisation that said that
	"the third sector is in vibrant health...more Third Sector Organisations than ever...more Government funding than ever."
	That organisation was the Conservative social justice policy group.

Michael Clapham: I can tell my right hon. Friend that the voluntary sector is thriving in the coalfield communities. In particular, the Coal Industry Social Welfare Organisation offers a one-stop shop for people in mining villages and continuity for the recreation facilities provided in those villages. What advice does he have for CISWO and other voluntary-sector organisations in the coalfield communities about accessing the finances of the Charity Bank?

Edward Miliband: I know very well from my constituency the good work that CISWO does. I would encourage it and other voluntary-sector organisations to apply to the Charity Bank in the North for funding. I hope that that will help them to prosper in the years ahead and to improve the work that they do for communities throughout the coalfield areas.

David Cameron: I am grateful for the Prime Minister's answer. Are not there three clear principles we have to follow? First, Kosovo cannot be left in some sort of suspended constitutional limbo. Secondly, the resolution of Kosovo's final status cannot involve the reopening of borders anywhere else in the region. Thirdly, should we not use the NATO reserve force to reinforce, as a precautionary measure, the troops who are in Bosnia? Will the Prime Minister follow those very clear principles?

Gordon Brown: Iraq is now a democracy. Millions of people have voted. When I went to Basra, only two days ago, I found that there had been a 90 per cent. fall in violence over the last few months. We are now able to hand over Basra to provincial Iraqi control. So instead of the British forces having to engage in a combat role, we will, over time, be engaged in training role, supporting the Iraqi forces. Over these last few months, 50,000 people have been trained up as police and security forces. This is Iraqis taking control of their own security. I would have thought that, even with the differences over the war, the hon. Gentleman would have welcomed the progress that is being made.

David Amess: Has the Prime Minister been watching a television series which I, for one, found deeply offensive? It was called "The Blair Years". During one of those episodes, Mr. Blair claimed that it was his decision to give independence to the Governor of the Bank of England to set interest rates—a fact that surprised some of us. Will the Prime Minister tell the House, in the light of the present Government difficulties with the economy, who is responsible for the terrible shambles that the Government are in? Is it the Prime Minister, the Chancellor of the Exchequer or Mr. Blair—or is it all the fault of the Opposition, Mr. Bean or dear old Santa Claus?

Paul Rowen: Is the Prime Minister aware that pensioners will only be able to collect their pensions from post offices on Christmas eve, because the Department for Work and Pensions will not transfer the money? Does he not believe that that will inconvenience many pensioners, and is another nail in the coffin for post offices?

Gordon Brown: With the support of the whole House, I start by paying tribute to our armed forces in Afghanistan and elsewhere. They are doing vital work, giving so much every day in dangerous places in the service of our country. Let me particularly pay tribute to the 86 British servicemen and women who have lost their lives in Afghanistan, 42 of them this year alone. I know that the whole House will join me in honouring the memory of the fallen and saluting the courage of all our military and civilian personnel.
	Let me, on the morning of the capture of Musa Qala, praise the professionalism and resolve of our forces in recent days. They have helped to defeat the insurgents and in a vital district of Afghanistan they have restored peace. Let me make it clear at the outset that as part of a coalition we are winning the battle against the Taliban insurgency. We are isolating and eliminating the leadership of the Taliban; we are not negotiating with them. For six years, 38 countries have come together with the people and Government of Afghanistan to rebuild this failed state, to prevent the return of the Taliban, and to root out al-Qaeda. I can tell the House that Britain will continue to meet our obligations and honour our commitments, discharging our duties on this task and to the people of Afghanistan.
	Having been reviewing our strategy since July, I now want to announce the next stage. It is a long-term and comprehensive framework for security, political, social and economic development in support of Afghanistan. This long-term comprehensive framework entails, first, more Afghan ownership, with the Afghan army, police and Government building on NATO military achievements and taking over more responsibility for their own security. Secondly, we support localisation and then reconciliation, with Afghans building on the creation of a democratic constitution by developing and strengthening their institutions not just at national but at provincial and local level as we support that search for political reconciliation. The third aspect is reconstruction. In what is still one of the poorest countries on earth, where only one in three has clean drinking water, life expectancy is just 43, and 80 per cent. of women cannot yet read, we will help to ensure, through reconstruction and development, that more Afghan people have an economic stake in their future. Fourth, to underpin this, we will help to ensure greater burden sharing by all partners and allies, with each of us playing our part—as hard-headed realists, not idealists—in the long haul to help the Afghans themselves to govern and secure their own land, and together therefore shifting our emphasis from short-term stabilisation to long-term development.
	The foundation, now and in the future, for our comprehensive framework is military support for the Afghan Government against the Taliban-led insurgency, also denying al-Qaeda a base from which to launch attacks on the world. Throughout last winter, Taliban propagandists repeatedly promised a "spring offensive". Instead, it is the British and other NATO forces, together with the Afghan army, who have taken the initiative. We have been driving the insurgents and extremists out of their hiding places, preventing them from regrouping and attacking the areas around the provincial capitals where stability is taking hold.
	It is this military success that has preserved Afghanistan's emerging democracy: a constitution, fragile but still intact; a free media; and a changing society where, unlike six years ago when women were banned from education, from work, and from virtually all of public life, there is now a higher proportion of women MPs in Afghanistan than in many western countries, and 5 million children are at school, 2 million of them girls once denied education.
	We need to hold and to reinforce what we have achieved together, so Britain will maintain a strong military force in Afghanistan of around today's figure of 7,800. That is a contribution second in size only to America's. We will increase our support for our forces: I can announce today, fully funded from the reserve, 150 new protected patrol vehicles specially procured for Afghanistan, bringing to 400 the total of new protected vehicles bought in the last 18 months for Iraq and Afghanistan. We will combine that with increasing numbers of Sea King helicopters in Afghanistan, and through NATO, new contracts will be negotiated for leasing commercial helicopters to move routine freight, freeing up military helicopters for military tasks.
	However, because we know that military success is only one part of the framework—a necessary but not sufficient condition for progress in Afghanistan—we will train Afghan forces to take ownership of their own security. Next year, we will aim for 70,000 trained Afghan soldiers, 20,000 more than now, supported by a rising number of British trainers and mentors—340 of them—that will be part of an overall NATO training force of over 6,000. Already, the Afghan army is proving itself in Musa Qala.
	But the challenge of supporting an Afghan lead on security goes wider than the armed forces; it includes the police, courts and prisons. Here we are dealing with decades of failure and corruption, and progress has been slow, but by March 2008 there will be over 800 international police trainers, including 65 police from Britain. That must be matched with a wider effort across civic society, which we will continue to support, for judges, courts and prisons—working with the grain of Afghan traditions but within international norms. One way forward is to increase our support for community defence initiatives, where local volunteers are recruited to defend homes and families, modelled on traditional Afghan "arbakai".
	To ensure that longer-term political and economic objectives are the guiding force behind the security campaign, we have brought the British civilian and military personnel together into a colocated headquarters. We will continue to strengthen their integration, and at the same time we will recruit and deploy more specialists who speak the local languages and understand tribal dynamics. But again, the Afghans themselves must be persuaded to take the lead in improving local and national government, and on my recent visit I saw the scale of the challenge, but also the opportunity, and the importance of our support.
	I can announce today that from our Afghanistan aid programme, which has already spent £490 million in six years, Britain will fund two additional programmes for local government: first, to help the Afghans create stronger provincial and local governance, including building the capacity of the directorate of local governance and supporting civil society groups to hold local government to account; and secondly, to provide more support for the national solidarity programme, which builds the capacity of local communities to run their own development projects.
	As a measure of the importance we attach to stability in building local capacity, we will immediately move infrastructure projects forward in Musa Qala, which we have recaptured, and upon which we now wish to build, on firmer foundations. That process will include a work programme for up to 10,000 people, and plans to rebuild and refurbish the district centre, and to rebuild the main high school and four mosques in the area.
	Our objective is to defeat the insurgency by isolating and eliminating its leadership. I make it clear that we will not enter into any negotiations with these people. As I have also made clear on countless occasions—most recently in Afghanistan—our objective is to root out those preaching and practising violence and murder, in support of men and women of peace. President Karzai's message to former insurgents is that if they are prepared to renounce violence, abide by the constitution and respect human rights, there is a place for them in the legitimate society and economy of Afghanistan. He and his Ministers told me this week that already some 5,000 fighters have laid down their arms. We will support President Karzai and his Government in their efforts to reconcile all parties to Afghanistan's democratic constitution.
	We know also that Afghanistan will never be stable without the constructive engagement of its neighbours. During my visit, President Karzai agreed on the need for greater regional cooperation. We continue to work with the Afghan and Pakistan Governments, the G8 and others to help bring stability across the Afghan-Pakistan border. Iran, too, must start to play a more constructive role, and I urged President Karzai to turn the current ad hoc meetings and structures that he has with Pakistan and other countries into more substantive mechanisms to bring stability and security to the region.
	The third priority is reconstruction and development —always at its most challenging where poverty is combined with insecurity and insurgency, but a strong long-term commitment to which is vital for the Afghan Government if they are to take responsibility successfully for the future of their country. I can therefore announce to the House today that, in total, Britain will make available £450 million in development and stabilisation assistance for Afghanistan for the years 2009 to 2012. This money will cover short-term priorities and longer-term objectives.
	When I was in Afghanistan and met local business leaders, President Karzai and I agreed a comprehensive plan, to be taken forward jointly by the Afghan and British Governments and the Aga Khan Development Network, to attract private sector investment into the country and to stimulate new businesses. A new growth fund, starting with an initial £30 million, will kick-start the development of basic legal and regulatory frameworks, build Government capacity to involve the private sector in providing public services, and pilot business training programmes. This will be led by a council of Ministers, business representatives and other experts, who will build contacts with the private sector inside and outside Afghanistan. They will advise the Government on how to increase investment and economic growth, and monitor the progress being made. Britain will also provide an additional £10 million for small loans, which will be of special help particularly to women, to start up or expand businesses; 70 per cent. of the initial applicants have been women.
	Our long-term objective is to support Afghanistan's own national development strategy by channelling our aid through the Afghan Government—which we believe to be the best route to achieving sustainable progress and the best value for money—on a long-term basis, helping the Afghans to plan ahead and, with good governance, to focus on their own priorities of economic growth, improving health and education, and building rural livelihoods. But we also recognise the need for short-term, high-impact stabilisation projects—better roads, more reliable power supplies, clean water and sanitation—which can make an immediate difference to the lives of ordinary Afghanistan citizens and show them the benefits of improved security and governance. Part of the £450 million that I announce today will help to fund Britain's new cross-government stabilisation unit, which has Afghanistan as its first priority, and which, with a global budget of £260 million over the next three years, will drive forward reconstruction projects and provide expert civilian support to rebuild basic services.
	Afghanistan cannot hope for stability while the poison of the narcotics trade continues to flourish, so Britain—Afghanistan's lead partner nation in tackling narcotics—continues to support the Afghan authorities. We are providing £90 million this year to help them in their long-term efforts against the drugs trade. While the situation with the poppy crop in Helmand province is difficult, it must be our aim to match the progress achieved in the rest of Afghanistan, where the number of poppy-free provinces has increased from six to 13 through a combination of stronger governance, targeted eradication—on which I have urged President Karzai to move forward—disruption of traffickers, strengthening of the justice system, and promoting legitimate agriculture.
	We will continue to work with our partners who have proved steadfast in Afghanistan, and I welcome the recent announcements from Denmark, France, the Netherlands, Germany and Estonia that they will maintain or increase their troop numbers. This progress must, I believe, now be matched by contributions from other countries in NATO, the EU and beyond. We are talking to all our partners to address the immediate need for more training teams for the Afghan security forces, especially the police, and we are having detailed talks with a number of countries on more support helicopters, which are needed. Where countries are unable to deploy their own troops or equipment, we are urging them to look at innovative ways to burden share and to help to fund those countries that can provide troops and equipment.
	Having described the challenges that we face in Afghanistan, I have set out our long-term commitment. It is to build on the military progress made so far by helping the Afghans to take greater leadership across security, governance and economic development. Because this priority and the need for a more consistent, integrated and co-ordinated international approach are now recognised across our partners, Britain continues to push for what will be the next step in this process: the appointment of a strong UN envoy to bring greater coherence across the international effort in security, governance and development and in relations with the Afghan Government.
	Britain will continue to fulfil our obligations to the Afghan people and the international community. We will support the Afghan army, police and Government as they progressively take over greater responsibility for their own security. We will work with our international partners and help the Afghans themselves to strengthen stability, foster democracy and build prosperity. At all times we will support the hard work, dedication, professionalism and courage of our armed forces, who are doing everything in their power to defeat terrorism and to lay the foundations of a stable and secure future for Afghanistan. I commend this statement to the House.

David Cameron: I thank the Prime Minister for his statement; there is much in it that we support and welcome, particularly what he said about equipment. With the recent success in Musa Qala, I believe that we can say that the men and women serving in Helmand today are every bit the equal of those who stormed the beaches in Normandy, who held the line at Inchon in the Korean war, or who retook the Falkland Islands.
	Christmas approaches, with our service personnel away from their families. I am sure that this is the time that the whole House will want to send them our very strongest backing. [Hon. Members: "Hear, hear.] I have been to Helmand twice in the last two years, and I have set out previously the significant course corrections that we need to make to avoid failing in Afghanistan. To prevent failure, I believe that we have to follow three principles: first, that, as the Prime Minister said, military success alone is not enough; secondly, that greater political progress is needed, based on a practical approach, rather than believing that we can impose a fully fledged western democracy in a deeply traditional society; and thirdly, that the international effort needs to be much better co-ordinated.
	Before I take each of those in turn, may I ask the Prime Minister about the reports in today's newspapers? Press headlines say clearly that the Government plan to talk to the Taliban, but the Prime Minister said in his statement that "we will not" talk to "these people". Does that not demonstrate once again the error of briefing the press in advance of making statements in this House? But is it not more serious than that? These appear to be completely conflicting messages, and they really could undermine our forces in what they are doing. In his reply, can the Prime Minister clear this up and tell us what he will do to investigate how this took place?
	Let me take each of the three principles in turn. First, on the military, is it not the case that with the international security assistance force, Operation Enduring Freedom and the separate Afghan military commands, we simply have too many chains of command? All the evidence in defeating counter-insurgencies anywhere in the world is that there has to be a single chain of command. What progress has the Prime Minister made with the US and with NATO towards getting these rationalised?
	Specifically on British forces, we have seen success in Sangin, at the Kajaki dam and now in Musa Qala, but is the Prime Minister satisfied that this time, there are sufficient Afghan forces to hold the ground that has been taken? On equipment and training, Lord Guthrie recently raised the example of a brigade being deployed to Afghanistan without having first been trained on medium machine guns. Is the Prime Minister satisfied that this will not happen again? As he knows, one cannot spend time in Helmand without hearing concerns about the lack of battlefield helicopters. He talked about that in his statement. Does he now regret the decision to cut the helicopter budget by £1.4 billion in 2004, and can he explain why the Government waited until this year before placing orders for new and converted helicopters?
	The Prime Minister talked about burden sharing. Can he tell us precisely what progress is being made in ensuring that we get a greater contribution from our NATO allies?
	On forces welfare, the Prime Minister has taken up our suggestion of additional pay in theatre. Will he now take up another suggestion—simple—that soldiers' leave should begin when they step off the aircraft on UK soil, not when they leave Afghanistan?
	On pay, is it not now clear that the new Ministry of Defence computerised pay system is not working properly? We had problems with the Royal Air Force earlier, and now we have some Territorial Army officers not being paid at all. Can the Prime Minister tell us today how many people are not being paid properly and what he is doing to put these failures right?
	Next, political progress. The general problem is that the writ of the Karzai Government does not extend to the whole country. In many places, Helmand included, the Afghan police are seen as corrupt. What steps are we taking in terms of mentoring, leadership, training, pay and discipline structures, and after six years, why are we still not getting this right? The UN drugs and crime chief has said:
	"The government's benign tolerance of corruption is undermining the future".
	A new anti-corruption tsar, Izzatullah Wasifi, has been appointed. Will the Prime Minister comment on reports in the newspapers that Mr. Wasifi was once convicted in the United States of attempting to sell $2 million-worth of heroin?
	Thirdly, on co-ordination, aid has been provided by the US, the UN, the EU and NATO as well as by dozens of smaller agencies. We have been arguing for more than a year that there should be a single high-profile figure to take charge of co-ordinating the international effort and providing real leadership in the way that Lord Ashdown did in Bosnia. The Prime Minister spoke about it, but can he actually tell us when he thinks it is going to happen?

Gordon Brown: First, let me deal with where we agree. We agree on praising the bravery, courage and professionalism of the forces. On Monday, I met some of the men who had either been in Musa Qala or who were about to go there, so I know what a tremendous effort British forces have been part of—working with the Americans and with the Afghan forces themselves, while at the same time taking a leadership role and doing so with enormous skill, expertise and bravery. They have reason to celebrate a huge success this Christmas, which turns back the Taliban at the time when people are retreating to the hills for Christmas. That is a psychological blow against the Taliban as well as a military success. It means that over the next few months we can build on what we have achieved in Musa Qala so that people in that area have a stake in the future—a Taliban-free future for that province.
	We also agree that work has to be done with the Afghan Government on fighting corruption and the drugs trade. We agree that there is a need for a co-ordinator, and we have been pressing for that for some years. At the same time, the changeover will take place in February, as had been announced previously by the Government to the House of Commons.
	We further agree that it is important for our aid money to show results in Helmand where we are based. Of the £450 million going into aid over the next few years, a very substantial part will go to Helmand. It is also important to build up the government of Afghanistan, so we want to increase the authority of the national Government over the whole country. That is why some of our resources are going into building systems of government, including for economic development across the whole country.
	Let me repeat what I said in my statement—that our aim is to isolate and eradicate the Taliban insurgency and to isolate the leadership. We are not negotiating with the leadership and we do not propose to do so. However, we want to support President Karzai in his efforts at reconciliation. If he is successful in bringing across members of the previous insurgency, who then declare that they will give up fighting, support democracy and be part of the system, that will show that the efforts to achieve reconciliation will have been important to the whole country's future.
	The right hon. Gentleman rightly stressed the importance that should be attached to the Afghan leadership and the Afghan people taking more ownership. I repeat that there will be 70,000 Afghan members of the armed forces by the end of next year; 20,000 more will be trained during the course of next year—and at a very high level because they are benefiting from the expertise of the British forces. Forces on the ground tell me that the Afghan army is well trained and well equipped for the tasks that it has to carry out.
	On equipment, six Merlin helicopters have been ordered and will be available later, while eight Chinook helicopters are being upgraded for the work that can be done in Afghanistan. I have also announced that new blades are being fitted to Sea King helicopters for such work. As part of burden sharing, I have approached a number of European Governments, particularly in eastern Europe, who are not involved to the same extent as we are in the Afghanistan effort, and asked them to provide particularly helicopters to support the NATO effort. I am confident that, in addition to the helicopters that we are adding to our fleet, we will get more support from those east European countries as the process of burden sharing takes root.
	The right hon. Gentleman raised several other issues. On pay, we have a new computer system and I believe that the Defence Secretary's efforts to ensure that it improves and gets the right payments to people are now bearing fruit. On the question of payment to the troops themselves, I think that it will have to be recorded that over the last year, we have tried to improve the position both through the troops' pay settlement and through the allowances given for being at the front. We in Britain have a six-month rota, while America tends to be longer, which is one of the reasons why the arrangements that the right hon. Gentleman asked about are different. There is a £2,300 payment for being on the ground in theatre for several months.
	We have also improved the allowances available for council tax, which has been reduced by £140, while at the same time extending facilities available for e-mailing, computers and telephoning—providing more minutes and more facilities for contacting relatives at home. Postal services have also been made free for the armed forces, which is entirely right. I am conscious that we need to do more on accommodation for the armed forces at home, which is why a substantial amount of the spending settlement has been allocated to accommodation.
	On each of those areas where questions have rightly been asked about the support that we give our armed forces, we are systematically taking action to improve what treatment is available. That is in recognition of what I suspect the whole House will want to support—the courage, professionalism and dedication of the people who give up their time to serve our country and serve democracy for the future.

Vincent Cable: The death of Sergeant Johnson reminds us of how much is at stake here. I welcome the Prime Minister's statement, particularly the positive feedback from the conflict at Musa Qala, but is it not the case that all rural guerrilla armies attach little importance to holding towns, and that, conversely, the military command of NATO has acknowledged that it finds it very difficult to hold territory that it has cleared? What has fundamentally changed the dynamic of this conflict to give the Prime Minister a more optimistic view of the future?
	In respect of the UK contribution, the Prime Minister made some helpful, sensible and practical suggestions about the supply of helicopters, but is it not the case that the number of functioning Apache helicopters has fallen from 60 per cent. to 50 per cent. over the last year? Is not one of the lessons the fact that we need to think more fundamentally about reorientating the defence budget towards immediate defence needs rather than those of the cold war? Will he have a fresh look at the very large £6 billion Typhoon commitment, which, if cancelled, would free up resources for immediate defence needs and troop welfare?
	On the number of troops employed, is the judgment about numbers based on defence needs or is it simply reflecting the reality, acknowledged by the chiefs of staff, that British forces—including the 4,700 who were tied down at Basra airport providing cover for the continuing American presence in Iraq—are massively overstretched?
	The Prime Minister is absolutely right to stress the importance of development assistance and we greatly welcome that, but is it not true that the annual budget of the Afghan Government on development is something in the order of £18 billion and that a large part of it is disappearing into waste and corruption? What is being done to introduce more effective safeguards?
	The Prime Minister acknowledged the role of the poppy economy in the lives of peasant farmers in Afghanistan, so what is he doing to stop the indiscriminate destruction of poppy crops driving those farmers into the arms of the Taliban?
	Finally, may I ask the Prime Minister about the precarious position of British public opinion? Is he aware that surveys in the past year suggest that a majority now favours withdrawal within a year and is increasingly concerned about the 86 deaths? There is a consensus among the parties in the House that we should continue to support the Afghan forces, but what is he going to do to persuade British public opinion that this activity is necessary and right?

Gordon Brown: I had hoped that there would be all-party agreement on what we are trying to achieve in Afghanistan. I am disappointed that the hon. Gentleman does not fully appreciate what I think is the central message of Afghanistan. Afghanistan is the front line against the Taliban and we must prevent the return of al-Qaeda to use the country as a base, and to do so, we must strengthen the politics, society and economy of Afghanistan. I hope that that will be common ground.
	Where we have had to make sacrifices and where we are in for the long term, of course we must persuade the British public continuously of the importance of what we are doing. The hon. Gentleman asks what has changed in Musa Qala. What has changed is that we now have competent Afghan forces, which are able to move in and take control of the area with the support of the Americans, the British and other NATO forces. I believe that over the next period of time we shall see an ever more competent Afghan army, given support by trainers from Britain and elsewhere. At the same time, as I reported, people who either had an indirect relationship with the Taliban or were previously fighters are coming over and deciding that their future lies within the democratic constitution of Afghanistan.
	As far as the weaponry is concerned, I mentioned that Merlin, Chinook and Sea King helicopters would be moving into Afghanistan in greater numbers over the next period of time. We need fast jets as well, as the Secretary of State for Defence reminded me, but the hon. Gentleman should not pose one against the other. We are determined not only to provide the equipment that we can for our forces, but to persuade other countries to share the burden. If there is one lesson of the past year or two, it is that we can, if we work at it, persuade other countries to play a bigger role in making their contribution to Afghanistan.
	The hon. Gentleman also raised the issue of heroin. It is true that half the heroin of the world comes out of Helmand province. It is also true that although we have made huge progress in other provinces, where poppy growing has ceased, we have not made the progress that we want to make in Helmand. Addressing that issue will mean a mixture of things. I hope that he would agree that it will mean eradication of the crops on the ground, rather than aerial bombing, as well as persuading people to take up different activities. This is not a short-term easy win for us, but something that we have to work at over the next period of time.
	One of the ways we can do that is by strengthening what the hon. Gentleman rightly said is a weakness—the central Government of Afghanistan. Of course there has been corruption, and waste and failure, but it is important to remind ourselves that progress has been made. However, as I stressed to President Karzai when I met him, it is important that he should have Ministers in place who command confidence. It is also important that he should work with the development effort, which should be more co-ordinated, on behalf of the 38 nations involved in Afghanistan. If we can do both those things over the next year, I believe that we shall see greater progress.

Gordon Brown: I am grateful for the right hon. Gentleman's initial remarks, in which he praised the courage and dedication of our armed forces. I am also grateful for what he said about burden sharing, which must be—this is common cause among us all—an important part of the next stage. When it comes to vital equipment, I believe that it is possible to persuade some of our allies in NATO—and, indeed, some outside—to make a contribution where they have equipment that can be put on the ground. I am thinking particularly of countries that I have talked to in eastern Europe that have helicopters, which could be of great benefit as transport helicopters in Afghanistan.
	The right hon. Gentleman is right that that raises bigger questions about burden sharing within NATO and about the procedures that will be adopted in the future. I know from talking from the Secretary-General of NATO that when it meets at Easter to discuss those issues, burden sharing will be on the agenda. That might be the right time to consider both financial arrangements and equipment arrangements that move NATO forward from where it has been, to a system where there is far greater burden sharing built into the basic things that NATO does.

Mike Gapes: The Prime Minister spoke of the importance of constructive engagement on the part of Afghanistan's neighbours. When members of the Foreign Affairs Committee visited Iran last month, the Iranians told us that 3,000 of their policemen had been killed while trying to intercept the heroin being smuggled into their country, which contains an estimated 2 million addicts. Last year, the Pakistani authorities expressed concern to our Committee about the fact that the Afghan side of the border was almost unpatrolled. Although Pakistan is losing tens of thousands of people in those areas, there is a big problem relating to movement backwards and forwards. What discussions has the Prime Minister had with the Afghan Government to try to increase their co-operation with their neighbours, who have legitimate concerns?

Peter Tapsell: While I welcome the Prime Minister's statement, which was more realistic than any statement about Afghanistan during the Blair years, will he keep very much in mind that the basic stumbling block to all the admirable aims that he has announced is the fact that the one thing that unites all Afghans is their hatred of foreign troops in their country?

Gordon Brown: I want to praise the work of my hon. Friend in linking up with women in Afghanistan to encourage the emerging process of democracy in the country. She is right that we need the UN co-ordinator appointed for February, and we need that role to better than the current one in co-ordinating the development efforts of all the different countries involved in Afghanistan and in building a strong relationship that is supportive to the Afghan Government. We also of course need the international effort she talks about to be expanded. We will, as a result of this statement, make all our efforts to do that.

Opposition Day
	 — 
	[4()th Allotted Day]

Nick Harvey: I beg to move,
	That this House notes the commitment, bravery and professionalism of the UK's armed forces in operations around the world; further notes with concern the detrimental impact that sustained operations on two fronts are having on the armed forces and their capabilities, resulting in critical overstretch; believes that the Government should conduct a new strategic defence review and reinforce it with regular reviews of defence after each general election; urges the Government to do more to honour its duty of care, notably through accelerating the improvement and upgrading of service accommodation, providing greater provisions for mental health and medical care for service personnel, ring-fencing the defence budget for welfare and introducing a Coroners Bill to help address delays in inquests into military fatalities; and calls on the Government to renew the Military Covenant and set up a cross-party Military Covenant Committee to monitor the state of the armed forces and their welfare.
	I very much welcome the opportunity to have this debate on the military covenant, and it is apt that it should follow on directly from the Prime Minister's statement on action in Afghanistan. I start by paying tribute to all our service personnel. It was clear from the contributions made during the proceedings on that statement that both sides of this House are united in recognising the professionalism, courage and bravery of the world-class fighting force that constitutes the British armed forces. We pay tribute to them and to the veterans who have served before them.
	This has been an eventful week with the recapture of Musa Qala and the handover of Basra province to the Iraqi authorities, which took place, at last, a few days ago. We should acknowledge the success of the British troops, working alongside our allies, in both those theatres and we should recognise the honour and the duty that we owe them in the light of all that. The military covenant, and the commitment that it implies, extends not only to the troops but to their families. As Christmas approaches, we should remember that many families will be apart, and that people will be anxious and lonely on account of that. We should think of the families as well as the troops.
	That is what the military covenant is all about—the implicit two-way trust and bond between the armed services and the nation. Members of the armed forces put their lives on the line and risk everything for the nation, and in return the nation has a duty to look after them, ensure that they are in a position to do the job that is asked of them and give them the assurance that when they are risking everything in operational theatre their families are being looked after adequately back at home. In that sense, it is clear that more remains to be done.

Nick Harvey: There has been a series of difficulties with the transfer to the joint personnel administration. Possibly my hon. Friend goes too far by badging the whole thing as a failure, but teething problems have arisen as it has been rolled out across the armed forces. Mess-ups in the pay arrangements are hard to bear on top of everything else, but I pay tribute to those who have done their utmost to put those right as quickly as they can. As time goes on, the purpose of the JPA will be fulfilled, and it will result in an improvement across the piece in the long run.
	Part of the problem is that the engagements in both Iraq and Afghanistan have proved to be longer and more hostile than originally anticipated. The Prime Minister reiterated today that we are in Afghanistan for the long haul. There is a consensus across this House that that is the right approach and that, for the reasons articulated today, this is something that we must do. It will remain a serious burden on, and challenge for, our armed forces for many years to come. We must try to ensure that that long-term commitment does not mean that deployments abroad are longer and more frequent than they should be. That is one of the key senses in which the military covenant is being broken, and there is quite a lot of agreement in this House about that. Even the Government have acknowledged that there is some way to go and that more will need to be done. This autumn, the Royal British Legion launched its campaign to honour the covenant, and that has played a useful part in raising public awareness of these problems and concentrating the minds of the political community.

Kevan Jones: Is it not the case that it was the Labour Government who brought in the armed forces compensation scheme in the last Parliament, which for the first time introduced lump sum payments for those injured in battle? That was not opposed by the Liberal Democrats or by the British Legion, or even commented on at the time.

Don Touhig: I welcome the debate launched by the Royal British Legion on this issue. I do not believe that the covenant has been broken, but we do have to do much more to improve it and to remain focused on it. The hon. Gentleman has mentioned several issues, including families and so on. I had the privilege of serving as the Minister with responsibility for veterans. Does the hon. Gentleman agree that we could better address some of the issues if we had a separate veterans' department within the Ministry of Defence to work with organisations such as the Royal British Legion to focus the whole time on issues affecting veterans and ex-servicemen and women?

Nick Harvey: I take the right hon. Gentleman's point. It is well made, and will be heard by some who serve in the armed forces. The Adjutant-General, Sir Freddie Viggers, has been willing to put his head above the parapet while he has been in post and say that too much accommodation is of a poor standard, too old or not modern enough in how it is fitted for families. We have a long way to go to bring about the improvement that we would want in the 41,000 units left in the estate.
	It is worrying that an average of 20 per cent. of married quarters—this was covered on the radio this morning—are empty at any given time. It costs the Ministry money to pay the lease for properties that are not filled. I accept that when large numbers of people are moved around, as happens with the armed forces, a percentage of the properties will always be empty. That would probably be a higher percentage than would be experienced by a commercial landlord. Nevertheless, it seems an awful lot when we consider that the MOD is paying to rent family accommodation in the private sector at the same time.
	The Ministry has told us that it would cost £750 million to bring all the family accommodation up to grade 1. It has also acknowledged that a minimum of £50 million will need to be spent each year to make the necessary improvements. The figures for 2006-07 show that the MOD did not spend anything like the £50 million that has been acknowledged to be necessary. The process, if it continues at the speed at which the work is being done and the money is being spent, rather than the speed that is being talked about, will take almost 50 years unless the MOD can improve radically on its performance in 2006-07. There is a long way to go.
	The contract to deal with repairs and complaints was given to the contractor, MODern Housing Solutions—MHS. In the year from March 2006 to March 2007, MHS received almost 9,000 complaints. The call centre received some 200,000 repair call-out calls in that year and dropped almost 9 per cent. while people were hanging on at the other end. It is no wonder that the families of our armed forces are getting somewhat exasperated wondering when essential repairs will be conducted, particularly when they involve ageing boilers in need of repair in the depths of winter. The situation was summed up well by General Sir Michael Rose when he said recently that
	"the system for the repair and maintenance of quarters has been repeatedly altered—something that has resulted in a much worse service for the soldiers... sub-contracting to commercial companies who have little understanding of the predicament of soldiers or their families has resulted in a bureaucratic nightmare which serves neither the soldiers nor the taxpayer."
	It is perfectly clear that there is a long way to go.
	My other major point concerns medical care. I recognise and acknowledge the vital role of the military ward at Selly Oak hospital and the extraordinary quality of the medical expertise available there. It is clear that that is now a world-class service and, combined with some good medical care in the operational theatres, it means that people are now surviving who previously would not have done so. That said, they are often seriously incapacitated following the initial acute interventions.
	It is the quality of the care afterwards that that is so often criticised and that many believe to be lacking.  [ Interruption. ] It is criticised by families and, occasionally, by the victims themselves. I have spoken to some of them individually. They are very appreciative of the high quality of medical care available at Selly Oak. It is clear that their aftercare, when they can be pushed back into different parts of the UK, does not match the high standard that they have experienced at Selly Oak. I am surprised that the Ministers are pulling a slight face at that, because many people have commented on it and would recognise it as being the case.

Bernard Jenkin: I would simply point out that these casualties result from operations. They should be regarded as an exceptional cost of operations, and, therefore, the care of the servicemen's families should come out of the Treasury reserve. We know the position that the Minister has been put in by the Treasury. He has been told that if he wants to fund coroner's inquests and representations, the money will have to come out of some other budget in his Department. That is not acceptable. I am quite prepared to stand here and say that we should spend more on defence in order to fulfil the military covenant.

Mike Hancock: I think that the whole House shares that view and will support the Minister in anything that he can do to speed up the process. However, if the Government are not prepared to fund legal assistance for families, will they continue to fund legal assistance for MOD witnesses at coroner's inquests and will they themselves be represented by an expensive legal counsel?

Bob Ainsworth: Surely it might be better to give retired generals a committee so that they do not have to do the foreword for a "Conservative forward" paper.

Andrew Murrison: I am grateful to the Minister. I thought I had done that, in what I hope he will accept was an acknowledgment of the validity of the Secretary of State's absence from the House today.
	The leaked 2007 Chief of the General Staff's briefing team report told us:
	"The tank of goodwill now runs on vapour; many experienced staff are talking of leaving."
	It is backed up by this summer's continuous attitudes survey, which revealed that many of our crucial middle-ranking people were considering leaving over the next six months. The most recent set of Defence Analytical Services Agency figures published in November show that that was no idle threat, as 1,344 Army officers have indeed left in the past six months alone. That is twice the number for the year before, and three times that for 2004-05. The common factor appears to be the consequences of overstretch, with harmony guidelines being routinely breached.
	The Under-Secretary of State and I on Monday, at an all-party group meeting on mental illness in servicemen, learned how important time between tours was for the mental health of our troops. Overstretch and the habitual breaching of harmony guidelines is undoubtedly making some of our people ill. I expect the Minister is as surprised as I am that none of our Liberal Democrat colleagues were at that meeting, particularly given their professed interest in the welfare of servicemen and the reference in their motion to mental health.
	Had the Liberal Democrats been there, they would have learned about community mental health pilots and perhaps shared my concern at the apparent desire of the Service Personnel and Veterans Agency further to reduce its exposure to the health care of veterans by shifting responsibility to our NHS, which with the best will in the world has struggled in identifying and prioritising the health care needs of members of a small and shrinking defence community.

David Hamilton: I shall be brief; I have asked a number of questions and spoke in the last debate on these issues. I feel very strongly about how we deal with the families of our armed forces, and I shall concentrate on that point.
	As I said last time, when people from my area left school many years ago in 1965, they went to the pits or the mills or they joined the Army—we had Glencorse barracks, which were referred to earlier. What surprises me and is very important is that we must move forward at a time of high expectations. The expectations of people leaving school are now much higher than many years ago. The days of dormitories are over; if we want to attract the best people into the armed forces, we must attract proper accommodation to go with that for when they are back home.
	We must ensure overall that families are well looked after. That is the biggest single issue that I find with members of the armed forces whom I meet—it is about the families. When our lads and lassies are at the front in Afghanistan or Iraq, all they are worried about is how their families are getting on back home. That is why—I say this to the hon. Member for Westbury (Dr. Murrison)—I emphasise the point about education and homes. As we develop a programme to make things much more stable so that people can choose to stay in their homes instead of moving to Germany, that will mean much more stability not only in the home, but for the children who attend school. In my constituency, a substantial number of children from Glencorse barracks attend the local primary school.
	While I was with the Defence Committee in Germany, I realised for the first time—one always learns from practical experience—that children need to be together. When children are moved into Army barracks, the education authority considers moving them to the nearest primary schools, so that they are spread out into different ones. My experience in Germany showed me that the best thing to do is to put all the children in the same school, because if any disaster befell a family it was amazing how that reflected itself all the way down through the families of the armed forces to affect the children, who depended on each other. I spoke to people at a local primary school a few months ago, and it was amazing how the young kids who were based in Germany and Cyprus before coming back to Britain had gelled. That was good to see. Because of the housing that is available to mothers and fathers, many of them have chosen and will choose to remain where they are in the long term instead of moving about as they have hitherto.
	I congratulate the Government on the long-term house-building programme. It is brilliant to find that we now have single people's accommodation with a television and a single bed and no other person in the room. It is very good for them to have that facility in some of the new build that has taken place. However, there will be a practical problem throughout the UK in trying to get workers for some of the schemes that are under way. In many areas, those workers will not be found. It is difficult in my area, where prices have rocketed and are three times what they used to be; that is why we are having to bring people over from the eastern countries to do the work. In appropriate areas, joint ventures between social housing organisations, local authorities and the MOD might be the way forward. I am glad that the Minister has agreed to meet me to discuss that.
	We must recognise the amount of money that is going into the developments that are taking place. The Government have undertaken to ensure that when people leave the Army they are on an equal footing when they go on to the housing list. I genuinely hope that they, and all Opposition parties, will take a different view. In Midlothian, armed forces personnel get priority so that when they leave the armed forces they go to No. 1 on the housing list. I have never once received a complaint from any member of the public about that position. If we are truly going to recognise the role of the armed forces, perhaps the leading lights from the three main parties can agree on one thing.

Mike Hancock: The transition from Madam Deputy Speaker to yourself, Mr. Deputy Speaker, was a stealthy operation—it would have done the SAS great credit to slip in so unseen.
	I am delighted to follow the hon. Member for Midlothian (Mr. Hamilton), because his intervention on the Conservative spokesman was very relevant and the response that he got was less than generous. The hon. Gentleman's point was that the changes that the Army, in particular, has brought about were geared around the lifestyle of families to ensure that children and housing became a much more stable commodity for service families, and it is wrong for anyone not to give credit for those changes. I am sure that five years from now there will be a distinct difference for service families in how education, in particular, operates.
	As the longest-serving member of the Defence Committee, our recent session— [ Interruption. ] I remind Labour colleagues that at recent meetings Opposition members were in the majority, because despite their huge numbers on the Committee, so many of them were absent. Over those 10 years, I have listened to lots of evidence sessions, but the best one by a long way and for a long time was that on the Defence Medical Services, which was attended by the Under-Secretary and the two leading Army medics—the one in charge of medical services and the surgeon general—with the NHS represented by a Health Minister. That showed a positive and open-minded approach to the issues that servicemen and their families were facing. It was a real pleasure for once to hear two generals who were committed to the issue before them, were not afraid to say somewhat controversial things, and willing when they did not have the answer to admit as much. I am like the former defence Minister, the right hon. Member for Islwyn (Mr. Touhig), who said that he could not recollect former chiefs who reported to him raising these matters when they were in office. One wonders how much credibility there really is among those people in the other place who continually make these comments when they are out of service but did little or nothing at the time. Mike Jackson gave evidence to the Defence Committee many times about the morale of the Army, and I cannot remember one occasion when he said that one of the key issues is junior ranks' accommodation or, for that matter, service accommodation generally.
	I would much rather listen to someone who, at the age of 42, having led 3rd Battalion the Parachute Regiment in Afghanistan, resigned from the Army and clearly stated the reasons. I hope that the Minister for the Armed Forces will look carefully at the points that that colonel raised in his resignation letter. That is a man who has had the job of commanding a unit and has had to face what the hon. Member for Newark (Patrick Mercer) had to face in commanding soldiers in the Balkans—dealing with the daily issues that soldiers face and the pressure that they are under on the front line. It is not about their own safety and what is affecting them, but about what is going on at home. That is why so many Members, including the hon. Member for Plymouth, Sutton (Linda Gilroy), intervened about the family welfare packages that are available. It is essential that we get that right and that we have a duty of care not only to service personnel but to the service family in its entirety.
	We need to look carefully at the issue of inquests. I enthusiastically support what was said in the statement about greater resources; every single Member here who has been close to such processes for any period welcomed that intervention and that new money. Coroners will be allowed to be more flexible about where the hearings take place.
	I return to the point, however, of legal representation. With regard to families not having legal representation automatically, we should not forget that that would be a matter not just of the MOD paying, but of people having access to legal aid. It would not fall on the MOD if the legal aid regulations were worded to the effect that the circumstances of a death could be treated in a certain way if they were sufficiently extraordinary—in the same way as they would if someone died in police custody or in prison. I cannot understand why we cannot overcome this problem. The cost would not fall on the defence budget, and the matter has to be seriously considered. The Prime Minister, in one of the interventions that he took on his statement this afternoon, said that he would look at it. We need to look at a change to the legal aid regulations, which would allow further change to happen.
	The hon. Member for Westbury (Dr. Murrison) talked about a lack of mention of welfare, families or education in our motion. Remarkably, there is no mention of education in the Conservatives' amendment to it. I wonder whether, just as in respect of the previous intervention he took, when he suggested that he did not quite know what we were talking about, he had not read his own amendment.

Mike Hancock: Despite the fact that the hon. Member for Westbury signed the amendment, I am sure that he would not have been the first Front-Bench spokesman who had signed something without reading it. Our motion certainly talks about the overall package of welfare, and it would have to be a pretty mean-spirited person who did not recognise that that, in its entirety, meant the welfare package for service personnel: housing, education, health—the whole gamut.
	On the question of housing, I represent an area where there is a high proportion of service housing, and I am a little mystified about where the 140 unfit houses are located. I cannot believe that they are all in Portsmouth. If there are only 140 unfit houses in the MOD estate, I cannot believe that they are all located in and around the Portsmouth area. That figures needs to be considered with a great deal of caution; I suggest that we look at it further. We must be renting more than 140 houses in the private sector because there is not suitable accommodation for service families in Portsmouth. I know for a fact that we are doing so. It is interesting that the current Chairman of the Select Committee on Defence continually tells us that it was his last task as a Minister at the MOD to sell off the housing estate. I am sorry that he is not with us this afternoon, because he would have another chance to justify that awful decision.
	The only winner in that disposal was Addington Homes. It is clear that the disposal of surplus assets has made up nearly half, if not all, of the price it paid the MOD for the initial acquisition. I am at a loss to understand why the MOD is building houses at the same time as Addington is selling them. I have yet to understand how that equation works out to the benefit of the nation. We sell off our service homes and say that we will rent them back. We allow some of them to fall into disrepair. They are no longer used by service personnel because they are not fit to live in, and Addington then gets the privilege of selling them off. At the same time, the MOD is spending hundreds if not millions of pounds in the greater Portsmouth area alone to replace housing.
	Let us get it right on housing. I admire what the Government have done about single person's accommodation for junior ranks in the Portsmouth area. That has greatly improved, but there is still a long way to go. Based on the estimate given to the Defence Committee five years ago, it will take 20 years to bring all single service accommodation up to standard. In Aldershot, we were renting four-bedroom houses so that six Paras could live in them because the accommodation available was inadequate and shameful. One of the reasons that they moved to Colchester—apart from the fact that Essex has some attractions and that they would have the hon. Member for Colchester (Bob Russell) representing them—was the appalling state of the single-service accommodation in Aldershot, which was demolished as soon as they moved out. It certainly was not the football that attracted them.
	I welcome the debate today, and I think that there is a general accord. I do not believe that the military covenant is being broken, but I agree with those who have said that it needs to be cherished and that it is in need of greater care. Resources have to be prioritised, and we have to be honest and fair. In a perfect world, everything would be in place, but we do not live in that world. We have to accept that major steps have been taken by this Government to bring about improvements—I think that this view is shared and supported by the whole House—but that is not to say that an awful lot still does not have to be done.

Gordon Marsden: It is a privilege to speak in the debate this afternoon, and a privilege indeed to follow the hon. Member for Portsmouth, South (Mr. Hancock), who always speaks on these matters with authority and fairness.
	I want to touch this afternoon on how the issues in question affect me as a constituency MP, and about the role that various organisations play in relation to them. It is instructive that the Government amendment talks about
	"the role played by ex-service organisations and other charities in contributing to...support".
	I should like to spend a little time talking about that role, and about the key role played by individuals. Over the years, along with other towns in Lancashire, Blackpool has contributed more than its fair share of servicemen to difficult spots. When I first came to this House, one of the things that first drew me into contact with veterans' organisations was the campaign for compensation for far east prisoners of war. That compensation was achieved under this Government after more than 40 years of inability to do so elsewhere.
	I strongly welcome what the Royal British Legion has done by introducing its campaign. It has focused minds throughout the House on the various issues, and the organisation has been commendably fair minded in the way it has pursued them. That is one of the reasons why I sat down with my local Royal British Legion association to talk about some of the key issues that have been raised with it, and I want to touch on them a little later.
	We have, quite rightly, heard a lot about the practical nuts and bolts of service conditions today. In speaking in the debate, I am acutely conscious that I am a civilian. Like the majority of people in this House, I have never served in the armed forces. I did have the privilege, however, of editing the magazine  History Today for 12 years, and in that context I dealt with and met many historians and the actual veterans whose service we are considering. Honouring our servicemen is not just about honouring them through practical conditions, but honouring them through remembrance of their service and their achievements. The recognition of those achievements in extremely important; it has a practical consequence, and links into their needs today.
	Both of my parents served in the armed forces during the war, and I am sure that many people here had parents who served. They are literally the generation to whom we owe everything. It is important that their needs should be addressed now, while many of them are in their '70s and '80s. That is why I was pleased when, under this Government, the service of the Arctic convoy veterans was recognised—the Russian convoy club in Blackpool and many of my constituents had brought the matter to my attention. Under this Government, we have had recognition of the Suez canal veterans, the Bevin boys and the Land Army girls. Those are intangible things, but important nevertheless.

Gordon Marsden: I will not give way because of the time constraints, and to allow other colleagues to get in. I am sorry.
	We need to look at practical things today. When I sat down with my British Legion colleagues in Blackpool, they were particularly keen to talk to me about three main issues: mental health care, support for families at inquests, and general priority treatment for veterans. All of those are important issues. I might add in passing that the British Legion in Blackpool has played a tremendous role not just in supporting veterans, but in fundraising. Because of the nature of Blackpool as a leisure and tourism town, the British Legion organisation there has raised £100,000 over the past 18 years through its annual Poppython, which is a 10-hour entertainment extravaganza that raises money in the weeks before Remembrance Day. I want to put on record my tribute to its president, Ian Coleman, and to the many members of the organisation who work very hard for it.
	Many Lancashire servicemen were taken prisoner while fighting in campaigns in Singapore and elsewhere. Every year, the Burma Star Association holds its reunion in the Winter Gardens, and my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) and I have been privileged to attend those reunions over the past 10 years. Behind that organisation, one man, Jack Nield—who, sadly, died last month—had been a tireless worker for the welfare of the Burma Star veterans over the past 20 years. Those are some of the individual stories behind the organisational ones.
	I want to discuss how we should honour all these people today, and how we can take these issues forward. We have talked about priority NHS treatment for veterans. Many veterans are not aware of that entitlement; indeed, many primary care trusts do not know about it either. That is why I have written to the chief executives of all my local trusts, including the Lancashire Care NHS Trust, to ask whether they have protocols for this, and whether veterans are receiving the priority treatment to which they are entitled. We must also remember that veterans suffer from a wide range of conditions, many of which might not emerge until 30 or 40 years after their active service.
	The survival rate issue produces particular challenges in regard to treatment. One of the members of my local British Legion committee said that some of the people on active service in Afghanistan or Iraq would not have survived 20 or 30 years ago. That is absolutely true, and we have heard testament today to the work being done in that respect. We need to support the people involved as much as possible through the process, and I welcome the investment that is going into Selly Oak and to Headley Court, but may I make a plea to the Minister to consider what more can be done to provide support and accommodation for families who have to be there with their loved ones over a long period of time?
	One of the most moving things that any Member has to do every year is to attend Remembrance day services and, in many cases, to lay wreaths in memory of the servicemen who have lost their lives. These issues have come so much more to the fore in recent years not only because of the media coverage of historical anniversaries but because we are acutely conscious of the sacrifices made in more recent conflicts, such as the Falklands, Afghanistan and Iraq. Last year, I laid my wreath at the Blackpool war memorial, following the parents of Gunner Lee Thornton, who was killed while on active service in Iraq. His parents are still awaiting his inquest, and I have written to the Blackpool and Fylde coroner on their behalf to ask what we can do to speed up the process. I welcome the Government's proposals on centres of excellence, but may I again make a plea to my hon. Friend the Minister to take whatever action he can on this issue now?
	The Veterans Agency—which is based just outside my constituency, in that of my hon. Friend the Member for Blackpool, North and Fleetwood—does an excellent job, but many claims are still disputed. The Government should not be afraid to put right old anomalies. In that regard, I want to make particular reference to the treatment of merchant marine servicemen, which has not always been on a par with that provided to the other services. In fact, just before his death, Jack Nield, to whom I referred earlier, sent me some casework on that issue, which I shall take up with Viscount Slim, the president of the Burma Star Association.
	Every year, at the Blackpool cenotaph, Jack Nield used to deliver the famous Kohima epitaph:
	"When you go home
	Tell them of us and say
	For your tomorrow
	We gave our today"
	Our servicemen are still giving their tomorrows in Afghanistan and Iraq, and their families are having to bear the pain and suffering. Let us ensure that everything that we do to support them and to honour the covenant matches that sacrifice.

Keith Simpson: It is a great pleasure to follow the hon. Member for Blackpool, South (Mr. Marsden) and to echo his sentiments. He was a distinguished editor of  History Today.
	I should like to look at a different aspect of the military covenant that I think parliamentary colleagues will regard as crucial, even if they disagree with some of my interpretations. It is the breakdown of the military covenant between Ministers and senior officers. I declare an interest in that I taught military history to service personnel for many years. I also did two and a half years as a special adviser in the Ministry of Defence. I have therefore seen these issues from both sides.
	I think we all agree, although we might place our emphasis in different areas, that public disquiet is increasingly being expressed not only by regiments of retired officers—to whom some serving officers refer as "the dead Army"—but by serving officers themselves. I am thinking particularly of the comments made by General Sir Richard Dannatt and the perhaps more discreet comments from Air Marshall Stirrup, the present Chief of the Defence Staff, about a range of issues that have also been mentioned today.
	There is nothing new about tensions between politicians and senior officers. It comes down to personalities, politics, budgets, resources and, of course, policies. Our history is littered with robust individuals in the military, including Nelson and Wellington, and Roberts and Wolsey in the late 19th century. Relations between politicians and the military during the first world war were often appalling—between Lloyd George and Haig, for example. There was also a robust relationship between Churchill and senior officers in the second world war. People such as Mountbatten and "Shan" Hackett also spring to mind. There have been faults on both sides.
	I suggest, however, that it is unusual to have had such an outpouring of feeling not only from retired officers—to have all the former Chiefs of the Defence Staff speaking as one is quite unusual—but from serving officers. We should accept the fact that, although most military personnel have a deep interest in political issues and will argue strongly not only about military matters but about matters that concern them as ordinary voters, including the environment, the police and that kind of thing, they tend to have a pretty low opinion of politicians. I suspect that we come just above child molesters and journalists in their rating system.
	When the former Chiefs of the Defence Staff spoke out, the hon. Member for Sunderland, South (Mr. Mullin) suggested that they were all part of a Tory plot. I do not think that that is the case at all. I suspect that many of them have never voted Conservative; some might not vote at all. The fact is that these serving and retired military men believe that the stresses and strains that the armed forces have been under for the past two or three years are unprecedented. The fact that Richard Dannatt, who is normally a most cautious and discreet man, spoke publicly strikes me as significant.
	I believe that the military covenant is in danger of breaking down because the chain of command itself is under such enormous pressure. Many middle-ranking and senior officers believe that their men and women—and, more importantly, their families—do not believe that the chiefs of staff are accurately and forcefully representing their concerns to Ministers; hence they feel forced to speak out. Anyone familiar with the array of military blogs will know the reactions of servicemen and women to this matter.
	One of the problems that the Government face is that their strategic defence review in 1998—which was warmly welcomed by the military establishment, which participated fully in it—was, sadly, never properly funded. Indeed, the man who drove it through, Admiral Essenheim, ended up retiring early from the Navy in disgust.
	For decades, as we all know, the military appear to the Treasury to have cried wolf on resources. On so many occasions—be it the Falklands, the Gulf war, Kosovo, Sierra Leone, Iraq or Afghanistan—they have said before those conflicts, "We have insufficient resources." Invariably, they deliver. Why? At the end of the day, they do so because they cannibalise their resources; because, as former Prime Minister Blair knew, they have a can-do mentality; and, more recently, because we have been borrowers from the Americans. Without being able literally to borrow kit in Afghanistan, the armed forces would not be able to operate.
	The military fear that eventually the armed forces will be irreparably damaged if this current tempo continues, and that there will be, in the words of General the Lord Guthrie, some degree of "operational failure". What is the attitude of Ministers to this? I do not accept the criticism of some colleagues that the problem is that none of the defence Ministers has any military experience. That is the norm and is likely to be the future norm, and it does not mean that they cannot perform their functions properly. After all, one does not have to be a train driver to be Secretary of State for Transport, or to be a teacher to be Education Secretary. What those in the professions that operate within those Ministries look for is Ministers who are competent and forceful and can explain the case and, where necessary, take responsibility for failures and inadequacies that they are ultimately responsible for. I am afraid to say that one of the Government's problems is that the Prime Minister has a reputation, unlike his predecessor, for not being particularly interested in defence. He has almost a Gladstonian attitude to defence, and it has not been helped by spinning.
	Many comments have been made about the fact that the current Secretary of State is double-hatted. I do not cast any aspersions on his hard work—he is a very committed man and I suspect that privately, he is deeply embarrassed about being double-hatted. However, the message that that sends to the servicemen and their families is entirely negative. It does not matter if he is only doing one hour a week on that other job; what matters is the perception, as much as anything else. That has contributed in part to what I believe is the erosion of the military covenant.
	The crucial element missing from any debate about the military covenant and relations between Ministers and the military is the role of the policy-making civil servants, who are absolutely crucial. In my day at the MOD, they were quite formidable. Sir Michael Quinlan, the permanent under-secretary, was a man who made the Chief of the Defence Staff automatically put an exercise book down the back of his trousers and my noble Friend Lord King start hiccupping nervously. He was a formidable man. I am not sure whether the policy-making civil servants of today are of the same calibre, but they are crucial in developing many policy areas and in maintaining the military covenant. We need to look more carefully at their role.
	If the House at least accepts my contention that there are problems—even if they do not accept that there is a breakdown of the military covenant—how do we repair them? First, Ministers just have to try harder and not spin. They have the responsibility of repairing mutual confidence. Equally, the military should not leak. They should not go to the media because if they do, why should their ordinary soldiers, sailors and airmen not do the same thing if they happen to disagree with the operational orders of a senior officer? This is going to depend on robust personal relationships. I see nothing wrong in the fact that there will be robust discussions between the military and Ministers.
	Finally, we need to look at the whole question of our national security strategy and institutions. If we do not get this right, we will have future conflicts in which the relationship will break down completely, and we will revert to a position in which politicians and the military have mutual antipathy, as they did during the first world war, when the military were referred to as "brass hats" and civilians were referred to as "frocks" because of their frock-coats. We need to get this right.

Kevan Jones: I welcome the debate. I recognise the hard work done by the Royal British Legion, but I agree with my hon. Friend the Member for Falkirk (Mr. Joyce) that some of its campaigning has been a bit misguided. I think that it has been hijacked by certain people for particular reasons. The hon. Member for Westbury (Dr. Murrison), who referred not to honouring the covenant but to the broken covenant, is a good example. However, the most disgraceful example that I have seen in the past few weeks is the pamphlet produced by the hon. Member for North Essex (Mr. Jenkin), published by Conservative Way Forward, which uses the poppy symbol as a way of blaming the Government for people's deaths in both Afghanistan and Iraq.
	I wish to say a few words about the campaign and military issues to do with medical services. I am proud to be a member of the Defence Committee, and I can say that in the inquiry that we are currently undertaking we are only coming across good news stories on the military services. On armed forces compensation, the criticisms coming from the Conservative Front Bench would have more credibility if they had also been made when the relevant Bill was passing through the House, but they were not. I served on the Committee that dealt with that Bill, and I can say that it was this Government who brought in lump sum payments for the first time for wounded servicemen and women. All the hon. Member for Aldershot (Mr. Howarth) did in terms of the report to the Defence Committee was oppose my suggestion that unmarried partners should benefit from pension entitlements, arguing that it would be immoral for them to receive such payments.
	I know time is short, but I wish finally to comment on the point made by my hon. Friend the Member for Falkirk about the former defence chiefs. I agree with everything he said, and let me add that I think some of them have selective memory loss. On the "Today" programme on 14 July 2004, Lord Boyce said about my right hon. Friend the Prime Minister when he was Chancellor:
	"I was encouraged that the Chancellor in his statement recognised the work that had been done by the Armed Forces who"
	have had a
	"particularly busy few years and by matching the good increase that happened in spending around 2002 with a similar sort of increase this time. So that is certainly to be welcomed".
	That is in stark contrast to what Lord Boyce is saying now. Former defence chiefs sometimes need to be reminded of their earlier comments when they make statements in the other place.

Derek Twigg: I have good relationships with Poppyscotland and am happy to have discussions with that organisation at any time.
	The hon. Member for Portsmouth, South (Mr. Hancock) made some interesting points about the Select Committee hearing on the subject of health, at which a good debate took place. He also mentioned the Annington Homes deal, which has caused so many problems for housing. However, he agreed that the military covenant was not broken and that the Government were doing a significant amount to improve things.
	The hon. Member for Mid-Norfolk (Mr. Simpson) is a distinguished historian with great experience of the staff college. I always listen to his views, although I am not sure that I agree with his picture of the relationship between chiefs and Ministers. I see the chiefs all the time and, although they are robust and put forward their views, we have a good relationship. If he goes back to Alanbrooke's diaries and their account of his relationship with Churchill or of the relationship that the Adjutant-General had with Churchill, he will know that history offers us some interesting guidelines. I always listen to what the hon. Gentleman has to say, but I do not accept his analysis on this occasion.
	My hon. Friend the Member for Falkirk (Mr. Joyce) raised some important issues about spending on the armed forces and the public debate that we should have. My hon. Friend the Member for Blackpool, South (Mr. Marsden) made an important point about our service and support for veterans. It is important that we support them, whether with mental health care or priority treatment—the Secretary of State for Health and I have recently announced some initiatives on both points. Veterans are important, so I hope that all hon. Members will support Veterans' day on 27 June next year. We are getting ever more support for that day from local councils and local authorities.
	The hon. Member for Newark (Patrick Mercer), of course, has great experience. I always listen carefully to his comments and he made some important points. However, he will know that significant work is also going on in recruitment and retention. I recently met the chief personnel officers for each service to talk about that and we continue to do lots of things to deal with the problem.
	My hon. Friend the Member for North Durham (Mr. Jones) made a point about compensation. The 2005 scheme introduced a lump sum and a guaranteed income payment scheme. It is important that we recognise that to the most seriously injured, that can amount to significant amounts of money—hundreds of thousands of pounds during a person's lifetime.
	The Liberal Democrats have produced a document called "Our Nation's Duty" that fails to recognise the progress made by the Government or the measures that we have taken. I do not think that they understand the many things that we are doing.
	The hon. Member for North Devon (Nick Harvey) spoke specifically about health. I visit injured service personnel in Selly Oak, Headley Court and elsewhere, and I also speak to their families. Overwhelmingly, they believe that the Government are providing excellent support and medical care. As for aftercare, Headley Court provides excellent rehabilitation, and good progress has been made elsewhere with welfare for families. To improve matters further, we introduced in October a pathway of care that allows us to follow injured personnel from the time that they are evacuated back home right through to their eventual discharge. The pathway of care will be rigorously monitored, by Ministers and also by those involved at the centre. I believe that that important step forward will ensure even better standards of service and care for our armed forces personnel.
	The hon. Member for North Devon talked about establishing military wards in the medical defence units around the country. Those units have military medical people who work with NHS staff, but we do not believe that they should have solely military wards, as usually there are not more than two wards full of military patients at any one time. However, it is true that we are developing a military-managed ward at Selly Oak. Lots of military people are involved in that, including a military ward master, and we are also in discussions about how the new hospital building there can be used to improve the care that we offer.
	In the minute that remains, I want to remind the House about all the things that the Government have done for the armed forces. For example, their pay rise this year was the best in the public sector, amounting to more than 9 per cent. for the most junior ranks. Military personnel also get an operational bonus worth £2,320, as well as council tax relief. The welfare package for our armed forces is the best that we have ever had, and the facilities at Headley Court and Selly Oak offer greatly improved support and welfare provision for casualties and their families. I believe that our armed forces now get the best medical care that has ever been provided.
	As I said earlier, significant amounts of money have been spent on housing for our armed forces, and much progress has been made in that regard. Other improvements include the modernisation of terms and conditions for the Gurkhas, something that has been welcomed by many people. In addition, we have taken many initiatives to improve recruitment and retention in the services.
	I welcome this debate. The Government are doing a great deal to improve the support extended to our armed forces and their families. I believe that it has never been better, but we continue to look at what more we can do, and I am sure that the Command Paper that my right hon. Friend the Secretary of State has announced will lead to further improvements in the future.

Vincent Cable: I beg to move,
	That this House notes with dismay that the Chancellor of the Exchequer has presided over the first run on a UK bank for over one hundred years and that the taxpayer has now made approximately £30 billion worth of loans to Northern Rock without the Government providing evidence of either the exact amount or the security of the loan, over and above deposit guarantees; further notes that the current search for a private purchaser for Northern Rock faces enormous difficulties in the face of the high costs of credit and the conflicting interests of different groups of shareholders; applauds the important role played by the Northern Rock Foundation in the North East and regrets the potentially negative consequences for jobs in the North East should Northern Rock go into administration; further regrets that the Chancellor chose not to recognise the importance of Northern Rock as a large employer in the North East amongst his principles for assessing Northern Rock proposals; calls upon the Financial Services Authority to suspend trading of shares in Northern Rock immediately to prevent insider trading; and calls upon the Government to introduce legislation to allow for Northern Rock to be placed immediately in temporary public ownership as the only action that will guarantee the loans are paid back in full as soon as possible at the lowest risk to taxpayers.
	We are very much in the middle of a banking crisis that is without precedent— certainly in my lifetime and probably for most of the last century. I was always brought up to believe that banking runs occur in far-off countries and that the lender of last resort is an obscure academic construction that appears in monetary textbooks, not the real world. However, I suspect that when the dust has settled on the Northern Rock affair, future generations will think of it much as people think of the South Sea bubble: a major historical event when a speculative bubble in financial markets burst. If one were to be pessimistic by thinking that the crisis will continue unabated, one could well seek a historical precedent in the Creditanstalt in Austria in 1931. Those events had major financial and economic repercussions.
	We are dealing with enormous sums: approximately £30 billion of Government loan, which excludes the deposit guarantees. To try to help Members get their heads around that, I point out that 30 billion is a "3" with 10 noughts. It is impossible to be precise about how much money is involved because the Government do not give the necessary information, and nor does the Bank of England. The information can only be inferred from the Bank's balance sheet, but the figure is approximately of that order of magnitude.
	To put the amount in context so that we can make sense of such an enormous number, I simply equate it to a little bit less than the annual defence budget. Given that it is a one-off payment, we are talking about six Iraq wars. Such a sum would build a high-speed train route from London to Edinburgh, and enough money would be left to build another one to Glasgow. The sum is the equivalent of about £5 million for every Northern Rock employee.
	That leads me to a key aspect of the argument: we are talking about not just money, but people. I have been to Newcastle several times in the past year to talk about its economic situation. Northern Rock is a major employer in north-east England. I understand that it has about 3,500 employees in Newcastle and about 1,500 in Sunderland. In addition to that employment, it has been an important part of the repositioning of the north-east of England from manufacturing towards financial services.
	In addition, the Northern Rock Foundation makes an important charitable contribution. It has spent some £175 million over 10 years, but it does not just spend a lot of money. As I discovered when I walked along Hadrian's Wall last summer, an enormous number of local charities rely on the foundation for obtaining charitable money quickly and effectively. They receive the money from the foundation much more effectively than they do from the national lottery.
	Before Ministers stand up and pose as angels of the north, it would be worth while for them and their Back-Bench colleagues— [ Interruption. ] I entirely understand why Labour Back Benchers will quite reasonably wish to speak up on behalf of their constituents and their constituents' jobs. If I was in their position, I would do exactly the same. However, if they have not already done so, I urge them to study the document on the principles for assessing Northern Rock proposals, which is the basis for the Government's sale. Those who have studied it will realise that it says absolutely nothing—not one word or one syllable—about either employment in north-east England or the Northern Rock Foundation.

Vincent Cable: The taxpayer is already heavily implicated in the company. Its liabilities include the deposits, which are already guaranteed, and they would include the loans that are rolled over but are not being rolled over at present because the market will not do it. In practice, the taxpayer is 100 per cent. liable for all these liabilities as they come due. If it was a nationalised company, temporarily, the Government would have some control over the process instead of being an entirely passive spectator. Let me retrace the steps to some of the key decisions that the Government have made. In September, there was a key decision to provide what was said at the time to be unlimited support. The question that needs to be asked—it relates to the intervention by the hon. Member for Houghton and Washington, East (Mr. Kemp)—is what estimate was made of the likely deposit withdrawal and the extent to which commercial loans would have to be replaced? At about that time, Lloyds bank made a proposal that involved £30 billion-worth of Government loans. The Chancellor, as we understand from the records, personally rejected that option on the grounds that the commitment of Government money was too large. We now know that £30 billion has already been advanced in Government loans without resolving the problem, so somebody made a horrendous miscalculation about the sums that were going to be involved. We need to know how that happened.
	A second basic question that I have been asking throughout is: why was this loan advanced in a completely open-ended and unconditional way? The Government, as the major creditor, could have said, "We will advance credit to the bank subject to the removal of the chief executive and others who were directly responsible for getting the bank into trouble in the first place." Any major creditor could reasonably insist on conditions, but the Government said, as did the Chancellor, rather pathetically, on several occasions in the Chamber, "We can't do anything about this because we don't own the bank." We now have an extraordinary situation whereby the chief executive of the bank, Mr. Applegarth, who drove the bank on to the rocks, is still sitting in the chief executive's chair driving the company and managing the Government's taxpayers' money. It is an extraordinary situation for the Government to have allowed to arise.
	Another fundamental question that I have asked is: when the loan had been advanced, what security did the Treasury or the Bank of England, or both, insist on in return for the taxpayer's money? One would have thought that that was a reasonable, prudent provision to request. I have been writing letters to the Governor of the Bank of England to ask him what security was available, and he has written me a letter that is so shameless that even Sir Humphrey would have been embarrassed to sign it. There are no figures in it, nor an explanation of what happened to the rolled-up interest on the loan. It is completely and utterly uninformative and, frankly, borders on the impertinent, because the Bank of England and its Governor are saying that elected representatives have no right to know what happens to public money. That is a completely unacceptable position.
	We can infer—we do not know it because it has never been confirmed—that roughly half the funding of the bank loan is secured pretty solidly against the assets of the bank, but the other half is not. Most of it is secured against what are called the free assets of the bank; in other words, it takes a secondary role to that of secured creditors such as Granite, which accounts for about half of the balance sheet. It is argued that that is fine because the money is secured against the bank's mortgage book. However, it has emerged that among the assets of the bank against which the Government loan is secured are £8 billion-worth of unsecured loans. It appears never to have occurred to anybody in the Treasury or the Bank of England to ask how secure those assets were.
	The confidence of the Government and the Bank of England was based upon a belief that Northern Rock had a very good repayment record from its borrowers. On paper, that looks perfectly true. However, people have now started digging—notably Panmure Gordon, one of the brokers, which has established that a lot of bad debt is actually being hidden because the Northern Rock bank did not employ the sort of rigorous practices employed in other institutions such as Alliance and Leicester and Bradford and Bingley. However, whether or not that is the case, there was an underlying optimism, all based on the strength of the mortgage book and on the value of the domestic property that underlies those assets.

Kevan Jones: I am very interested in what the hon. Gentleman is doing. He is continuing to run down the bank, which I do not think is a very clever thing to do. Anyone who has a mortgage with the Northern Rock bank or who has applied for one—in the north-east, traditionally—will know that it was a damned building society, then bank, to get a loan from. The traditional, old loans are quite secure.

Vincent Cable: My right hon. Friend is absolutely right. His intervention underlines the reason why, historically speaking, Northern Rock was so highly regarded, particularly as a building society but later also as a bank. The chief executive exploited that reputation to run it into a very dangerous situation. I am not blaming him alone, however. The regulators should have seen the dangers.
	I want to turn now to the different options available, and to where things stand in regard to the proposed private sale. There seem to be two serious offers, although others come and go. There is the offer by Branson, and that by Luqman Arnold's Olivant group. They differ in that Branson's consortium wants a takeover and is willing to trade on the basis of the Virgin reputation as a way of attracting new deposits, while Luqman Arnold is not interested in a takeover. He wants a minority stake and to run the bank properly while restoring it to its purpose as a responsible bank.
	In normal circumstances, I am sure that either of those proposals would be an interesting proposal to be treated with the market. This is an extraordinary situation, however, and it is becoming increasingly apparent that neither of those two, or any of the others, will be remotely able to raise the amount of money required to take over the bank as a going concern and give the Treasury the guarantees that it requires. Of course, they say that they can guarantee the first half, the £15 billion. What they cannot guarantee is the next £15 billion. That will be the difficult bit, because that is where the lack of security is.
	Nor should we be under any illusions about the motives of the people who are bidding. I have never met Mr. Branson, but he seems to be an engaging character who has had some successful ventures. He is, however, a front man for a consortium of hedge funds and private equity operators whose aim is to make a killing. He is proposing to invest about £200 million in a company whose gross assets will be more than £100 billion, and he will be hoping to sell it on in due course and make a large capital gain which, as he is registered overseas, might well not attract UK taxation. So we are not talking about Mother Theresa here; we are talking about some very tough short-term financial investors.
	As I talk about the bidders, it is coming back to me that the Government have made a bad mistake—even within their own policy—in giving preferential status to one of the bidders, the Branson group. The other bidders have discovered, as they enter the early stages of due diligence, that the Government—and the taxpayer—are paying the legal fees of the Branson consortium but they are not willing to pay theirs. Understandably, they are aware that they are not operating on a level playing field.
	I do not want to run Mr. Branson down, but it is a matter of fact—of which I was previously unaware—that he has a criminal record for tax evasion. There is therefore good reason to believe that the people who have to stump up the money for his consortium may well not regard him as a fit and proper person to run a public company, let alone a bank, and let alone as someone responsible for £30 billion worth of taxpayers' money. So there are real questions about whether this private bid is ever going to succeed.
	In the context of the private bid, one must also ask—this goes back to the question about private shareholders—

Vincent Cable: I am sure that Sir Brian Pitman is absolutely admirable. He is a 75-year-old ex-banker with a formidable history and I am sure that he is serious. I have talked to some of those associated with both the people in question, and they are serious people. That is not the problem—the problem is how they are going to raise, in markets that are now almost closed, the staggering amounts of money that they need to realise their bid. That is the issue—it is not about their character or their history in running banks.
	Because the private sale is becoming increasingly problematic, we effectively have two options. One is to put the bank into administration, which is probably what everybody would regard as the "nuclear" option. Under those circumstances, not only are the shareholders in the north-east wiped out, but there are question marks over what happens even to the guarantee deposit. It would take a long time for those guarantees to be fed back to the depositors, and there would be continuing questions about deposits in other banks because of the difficulties. How would the public loan be retrieved? It would be retrieved either by a very slow run-off as the mortgages were redeemed, or through a fire sale in what is currently a very depressed market. Administration thus presents enormous problems, which is why we Liberal Democrats are suggesting that a period of temporary nationalisation is the least worst of the three basic options available: nationalisation, private sale or administration.
	Of course we recognise that, in practice, civil servants are not the best people to run a commercial bank. Professional management would have to be hired, and they would have to get to the root of what is going on at this bank. It might prove to be a very sound institution deep down, with a lot of very good assets; we do not know. However, if, having dug down, those managers establish that that is so, they can re-launch it in future years and there would be a substantial upside for the taxpayer that would not result from a private sale. On the other hand, they might discover that it is a can of worms—we do not know—and if so there will have to be a gradual run-off in what is a very difficult environment.

Philip Dunne: I recognise that the hon. Gentleman's preference, like ours, is for a private sale. However, in advancing his case for nationalisation over administration, what analysis has he done that leads him to suggest that taxpayers, whom he has just identified as the primary beneficiaries of either of these routes, would do better out of nationalisation—given that they would potentially be taking on all £110 billion of liabilities, plus redundancy liabilities that we have not even calculated yet—than administration, through which they are currently exposed only to £30 billion worth of liabilities?

Vincent Cable: It is partly what the Bank of England has been trying to do, but not very successfully. If the Bank of England were good at running a commercial bank as opposed to a central bank, it would have taken some elementary precautions like insisting on conditions for its loan, but it has shown itself to be incapable of doing that.
	My final point—I am conscious that other Members on both sides wish to speak—is that speed is of the essence. We are now in the position where the patient is in the operating theatre and, frankly, bleeding to death while the Government surgeon-general is sitting around saying that we need a full health check before anything can be done. That is not very sensible. Urgent action is required. I hope that I have made the case that public ownership is the least worst option. If it is, the Government will need to act very quickly and will need enabling legislation in order to do so. It is better that it is done now than in two months' time when the position may be infinitely worse.

Vincent Cable: I am rounding off.
	Finally, there is a strong additional reason for wanting to park the problem of Northern Rock in the solution that I have described. It may well be the case that there is much worse to come. We may well have had the first of a tsunami wave with others behind it. We know what they are; we can see them. One of the problems that arises is that other banks—even very sound banks—are running into serious difficulties in raising capital from the markets. We know that there may well be a very nasty shock in the domestic property market. It is absolutely essential that the Treasury and the Bank of England are totally focused on how to deal with these emerging problems. At the moment, they are totally preoccupied with the problem of the Northern Rock bank, getting the wider problem of the emerging financial crisis completely out of perspective. The Government have failed so far, so they should pick themselves up from the floor, act quickly, take the bank into temporary public ownership and, we hope, limit some of the damage that has already been caused.

Kitty Ussher: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"endorses the approach taken by the Government to Northern Rock to maintain financial stability, protect the interests of taxpayers and safeguard the position of depositors; welcomes the publication of a statement of principles underpinning the Government's response to proposals received by Northern Rock with regard to its future; acknowledges that Northern Rock has announced that it is continuing to explore a range of options as part of its strategic review; recognises that the Government continues to keep all options open in relation to the future of Northern Rock; and notes the Chancellor's assurance that he will keep the House fully informed of further developments with regard to Northern Rock."
	I am looking forward to the debate and particularly to the contributions of Back Benchers, but I thought it might be helpful if I made three main points. I shall talk about: first, the wider context to the events of the last few months; secondly, the current position with Northern Rock; and thirdly, any lessons to be learned for the future from what has happened.
	The UK entered the recent period of turbulence in the global financial markets in a very strong position. The UK economy has seen 61 consecutive quarters of growth—the longest period since records began—and we are growing faster than any other G7 nation this year and will continue to grow next year.

Mark Hoban: We said that we would facilitate the passage of any such legislation, but we need to see it first so that we can examine the reforms that the Government propose. We have offered that support but have had no response from the Government.
	I turn now to the speech by the hon. Member for Twickenham, who is no longer in his place. He did not say how he thinks that nationalisation would improve matters, or set out what he would do if the situation did not improve. He did not detail what his strategy for running the bank would be. Would he want to continue to accept deposits? In his speech today and in previous statements to the House and the media, he has been very critical of Northern Rock's lending practices. Would he want to continue to offer mortgages, or would he close down that aspect of the business? How would he manage the existing book of mortgages? Would he encourage prepayments, or would he roll them over? How much more money is he prepared to put at risk while Northern Rock is in public ownership? Those are all decisions that a nationalised bank and its owners—the Government—would need to make. The hon. Gentleman failed to set out a clear strategy for a nationalised bank. He may have captured the headline, but there is no substance to the soundbite.
	One thing is crystal clear—it would be a sign of monumental failure if the Government had to nationalise Northern Rock. It would be an indictment of their handling of the crisis. At every step of the way, the Government have demonstrated incompetence. The Prime Minister ignored the proposal from the Governor of the Bank of England for reforming the rules to do with early intervention and deposit insurance. The Chancellor failed to display leadership by not having a plan when it was announced that the Bank of England was acting as the lender of last resort. That triggered a run on Northern Rock, in the face of which the Chancellor dithered over whether to issue a guarantee to depositors. Even when he announced it, he was not sure as to what he had guaranteed. The Chancellor and his aides have sown doubt and confusion in the sale process, keeping options open but remaining unclear about what they are.

Doug Henderson: I have plenty answers and the north-east has plenty answers for the Liberal Democrats—I can tell them that. I want to engage with one of those answers.
	The Newcastle  Journal is not renowned in the north-east as an anti-Liberal Democrat newspaper. On 20 November, which was well into the events at Northern Rock, the editorial in the  Journal—speaking on behalf of the people of the north-east—said:
	"The Chancellor did the right thing yesterday when he held true to the path he has taken since crisis engulfed Northern Rock...Of course, the approach has its critics, such as the hapless Vince Cable, whose posturing must embarrass Lib Dems in the region."
	It is unfortunate that the hon. Member for Twickenham (Dr. Cable) is not in the Chamber to hear what people in the north-east are saying. The hon. Gentleman has a reasonably measured demeanour when he is in the Chamber, but when he is in a television or radio studio, we hear headline grabbing, without a thought about his party's policy, or the consequences of his posturing not only on his party's effectiveness in the north-east but, far more important, on the economy of the north-east and the people of the north-east.
	The hon. Gentleman gave the game away during the debate, so it will be interesting to read the  Official Report tomorrow—I took a note. He was asked what would happen after nationalisation and his reply was clear. He said that none of us knows exactly what would happen. That was this afternoon—not half an hour ago. If the Liberal Democrats want to be a serious political party with serious policies about serious issues affecting people in the north-east, what sort of strategy is that? Not today, but at least four or five weeks ago, the Liberal Democrats made the main plank of their policy that the business should be nationalised. When the hon. Gentleman said that, he knew he could grab a cheap headline, as the Conservative spokesman pointed out, yet he does not know what the consequences of his policy would be.

David Anderson: I am glad that the hon. Gentleman asked that question; I was about to come to that. He is right to say that all those important things alone would not justify it, but they are part and parcel of what will not be there if we do not carry on trying to find a resolution.
	This is not just a parochial matter. The hon. Member for Twickenham (Dr. Cable) said that what happened was unprecedented and unexpected. It hit Northern Rock in a way that it should not have, and it hit other banks, but we did not intervene as a Government solely to protect Northern Rock but to protect the whole banking system. As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, it was about not only what was happening in the north but in this part of the world. The whole system was at risk, and we stopped that.
	It is clear that the Liberal Democrats are starting to bottle out. As usual, they have taken an opportunistic chance to make some hay while the sun shines—that is the way they work, and that is up to them. They talk about nationalisation. I spent my life working in nationalised industries—20 years in coal mines and 16 years in local government. I have a very different ideological view from that of my party's Front Benchers: their view is that public ownership is a good thing and we should have more of it. However, we should not have it only when things are on their knees. That is what happened in the past. In the post-war years, we nationalised the pits, the railways and the steel industry because we had to, because they had been run down and not looked after properly by the Government or the businesses that were supposed to be protecting them.
	Northern Rock may not be nationalised, but we should give a chance to the people who have stepped in and fulfilled some of the criteria put forward by people who work for the Rock and by the Governor. Virgin and Olivant have said in their bids—they must be tested; I do not have a problem with checking carefully what companies say before we sign up to it—that they will make up-front payments back to the Treasury on day one, give guarantees that the rest of the taxpayers' money will be paid back over two or three years, support the work force with guarantees of no compulsory redundancies, support the foundation, and protect mortgage-holders and savers. They will also do what they can for the shareholders who, as Members on both sides of the House have said, need to understand the situation and bear the risk. Surely we should give the people who have come forward with a bid the opportunity to work with the bank and with the trade union, on behalf of the work force, to try to make this work.
	The Liberal Democrats have come forward with proposals that they think will grab a headline. We are used to that. The people of the north-east will see through what they are doing and will not forgive them for it.

Jim Cousins: But it is precisely that general underlying point—a sound one—that reinforces the value of Northern Rock's lending practices in being able to make lending available to workers on lower incomes and to make it work on a sustainable basis. Northern Rock's default rates were among the lowest of the big mortgage lenders—a point that needs to be repeated time and time again, because it is part of the real hidden value in the Northern Rock business, which must not be thrown away for nothing in our debates.
	The hon. Member for Twickenham also sought—I return to the point—to downgrade the preferred bidder. He referred to Richard Branson, the gentleman who runs the Virgin consortium. I freely acknowledge something that is not widely known—that the name Virgin has everything to do with tax and very little to do with sex. It is a reference to the British Virgin islands, which were the original tax location of that particular business. All that is fair stuff and fair copy. That is why the hon. Member for Twickenham should have acknowledged the significance of the Government's requirements, set out clearly in a letter of 25 November, which is available to the House. It states that
	"returns on equity investments made by members of the Virgin Consortium and other holders of ordinary shares must be restricted until the public sector loans have been paid back with interest and all other public sector commitments are at an end."
	That was a requirement set out by the Government on 25 November and it has been accepted by the preferred bidders. These are important points to bear in mind; we must not write down the value of this business.
	Now we come to the question that I asked the hon. Member for Twickenham in an intervention: what is the point of nationalisation? Is it to secure Northern Rock's future as a growing business, headquartered in the north-east? The hon. Gentleman was not very clear in his answer, but the real answer appears in his motion, which refers to
	"temporary public ownership as the only action that will guarantee the loans are paid back in full as soon as possible at the lowest risk to taxpayers."
	It could not be clearer that the purpose of nationalisation is to put the Government at the head of the queue of creditors in getting their money out. Those are the worst possible conditions in which to be considering the bank's future. That is a profoundly irresponsible policy. It is nationalisation for fire sale and nationalisation for break-up. Nationalisation for sustained recovery and growing on the business would be a different proposition, but that is not the proposition that the Liberal Democrats are putting forward.
	I return to the heart of the matter. The north-east of England does not want to exist for ever as a welfare-dependent region. My hon. Friend the Member for Blaydon (Mr. Anderson) pointed out that we have in Northern Rock an important business, in a growing part of the British economy, headquartered in our region, which few big businesses are now, whose lending practices have been a success. That is part of the new economy of which the north-east of England wishes to be part. The Question before the House is: how do we secure the future of Northern Rock, so that it can play its part in the wider recovery of the north-east economy? If Northern Rock goes down or is broken up, made bankrupt or run off, as the right hon. Member for Wokingham (Mr. Redwood) mentioned, that would be a disaster for the north-east. It would do psychological damage to the north-east, just as the first Thatcher recession did between in 1980 and 1981. Yet that is the hidden meaning of the policy of nationalisation that has been put before the House today. It must be rejected.
	There is a wider point, however. If Northern Rock goes down—broken up in a fire sale, nationalised with the Government putting themselves at the front of the queue of creditors—that will do enormous damage to the City of London's reputation not only in this country and Europe, but throughout the world. That is not a policy that can be contemplated. How will the Government deal with other banks in order to make arrangements for the run-off of sub-prime mortgages, of which Northern Rock has very few, if they are themselves the owner of a bank? It is a ridiculous—

Philip Dunne: That would be helpful not only to those of us who are trying to understand what has gone wrong, but to the bidders to get some idea of the details of the security package.
	As my hon. Friend the Member for Fareham (Mr. Hoban) said, the Chancellor has confirmed that taxpayers' money is safe and will be repaid. That puts the Chancellor's position and credibility firmly on the line in the context of the Northern Rock situation and its resolution. I very much hope that the taxpayer will receive all their money back—that is the outcome we all want—but it is hard for me as a former banker to see how that can possibly occur. While the chairman of the Financial Services Authority confirmed yesterday to the Treasury Committee that he regards Northern Rock as solvent, that is due only to the Government facility, since it has not been able to meet its debts as they fall due since mid-September, which is the reason why it went to the Bank in the first place. We now know from the Economic Secretary that the security package includes Northern Rock's residual share of the mortgage held in Granite, ranking behind £48 billion-worth of security, at the last count, in Granite. It is composed of unsecured lending and home-equity release mortgages, which are the UK equivalent of sub-prime mortgages. It also rests on a portfolio of traded securities—some £15 billion according to the last balance sheet we saw—issued by others. Given what is happening in the credit environment and to the valuation of traded securities around the world, whether that is of par value is somewhat doubtful and an open question.
	Let me conclude on nationalisation and pick up on Members' observations on that. Nationalisation is not a solution that protects the taxpayer. It could do so only in the event of benign market circumstances and over a prolonged period, with the bank being run as a business in competition with every other financial institution that is in the mortgage business around the country by a Treasury that, frankly, is not equipped to do so. It is highly unlikely that those circumstances will prevail. The other circumstance in which it might possibly work is as a facilitation of a back-to-back deal with a private sector purchaser. As I pointed out in an intervention, nationalisation places the Government in the position of being a 100 per cent. equity owner responsible for meeting all £110 billion of liabilities that might fall due. Is that a responsibility that the Liberal Democrats really want the Government to undertake?

Quentin Davies: I do not know how much light this evening's debate has been able to throw on the problems in the interbank market or the problem of Northern Rock. It has shed a lot of light on the state of the Front-Bench teams of the Conservatives and Liberal Democrats. Once again, it has shown that the Conservatives have no original ideas. As has become blatantly apparent this evening, they are not even prepared to answer their own questions. They are in the business of saying contradictory things to different people, of gesticulating in different directions, and of hinting that their policy line is one thing and then, when that becomes inconvenient, simply saying that it was not party policy when it was stated after all. We have seen through them this evening.
	The Liberal Democrats, who called for this debate, have also shown that they are all over the place, even though they have a concrete proposal in the form of nationalisation—it is surely the wrong one. It makes no sense for the hon. Member for Twickenham (Dr. Cable) to say that he is extremely worried about the exposure of taxpayers' money through the Bank of England deposits with Northern Rock and a second later to say that he thinks the taxpayer should not just have the deposit risk of a defined amount of money, but should take on the equity risk too by nationalising the bank. That equity risk will not only be the existing equity risk, because, as has been pointed out by the right hon. Member for Wokingham (Mr. Redwood), who made a sensible intervention for once, future liabilities in the form of redundancy liabilities and so forth can crystallise subsequently.
	The hon. Member for Twickenham said two other odd things this evening. One was that there has not been a comparable banking collapse since Creditanstalt in 1931. A range of banking collapses have occurred since then—there were a number in the 1970s involving the secondary banking crisis. One such collapse happened to London and County Securities bank, which had as its director at the time Jeremy Thorpe, then leader of the Liberal party. It is little wonder that the hon. Gentleman does not want to remember that one. That situation had to be solved by the famous lifeboat, which turned out to be a successful support operation. The leader of the Conservative party is even more ignorant than the temporary leader of the Liberal Democrats, because he said, at Prime Minister's questions, that there had not been a comparable bank crisis or run on a bank for 140 years. He was even further from the mark than the Liberal Democrats are.
	Another extraordinary thing took place. The hon. Member for Twickenham knows quite a lot about economics, but he allowed himself to be completely seduced into demagogy of the most irresponsible and superficial kind this evening. He started comparing £30 billion-worth of deposits placed by the Bank of England with Northern Rock—if that is what the real figure is—with the cost of high-speed trains or hospitals. He knows as well as anyone, and perhaps better than most, that if one buys high-speed trains or hospitals, one loses the cash because it will have been definitively given away. If one places money on deposit with a bank, one has it there. Unless any further write-offs, in addition to existing provisions on the book of Northern Rock, prove to be more than the value of the equity, all the deposits will be repayable, and it is inconceivable that more than a very small proportion of those would be the target of subsequent provisions. The hon. Gentleman knows that. He was merely trying to play to the gallery and to be demagogic when to do so is thoroughly irresponsible.
	What should we do in this situation? The Government are doing the right thing. It was right for the Bank of England to intervene, because that is what lenders of last resort are for. It would be disastrous to have a banking collapse when the interbank market is in a considerable psychological crisis, and we are right to prevent that from happening. We should continue with the present arrangements—that may be for much longer than next February, and that does not matter—until we can find a suitable trade sale. Ultimately, if that did approach not work, we would have to opt for administration.
	I hope that the Government bear one point in mind: the enormous moral hazard involved if there were any attempt—I am sure that the Government would not be tempted to do this—to bail out shareholders. That would be wrong. They bear the equity risk of the business and they would have been the beneficiaries had the high-risk strategy of funding the bank up to 70 per cent. on the interbank market worked, so they must take responsibility for that strategy that their management adopted. We cannot have the moral hazard of shareholders in that situation being bailed out, otherwise every bank will think that it can adopt the highest-risk strategies, whether on the asset side or the liabilities side, because if it works they will get the reward and if it does not, the taxpayer will pick up the tab. The result of that would be corruption of good banking standards throughout the country.
	I welcome today's important news that the regulators and lenders of last resort here in the European Union and in the United States have got together to provide liquidity for up to three months for the world banking system. What we need in this crisis is exactly what the Government have displayed—calmness, strong nerves and consistency. It is clear that the only Front Benchers displaying those qualities tonight are my right hon. and hon. Friends.

Julia Goldsworthy: I had hoped for a greater welcome in the House for this debate, because this is the only opportunity we have had since the issue blew up to discuss points that so many hon. Members from Newcastle and the surrounding north-east area have raised about what should happen to the employees of Northern Rock. The Conservative Front-Bench spokesman said that his party had called for a statement on the issue, but that would not have allowed a full discussion. As my hon. Friend the Member for Northavon (Steve Webb) said, the fact that the Conservatives did not even feel it necessary to table an amendment that could have outlined some of their views shows how little they have to contribute.
	Today has been an opportunity to raise wider issues about the run on the bank and allow parliamentary time to discuss, and possibly express our preference for, some of the options on the table. Whatever the final outcome, it is clear that there will be a human cost to this episode, although the Minister explicitly did not mention that in her remarks. It was raised by hon. Members with constituents who work for Northern Rock, and we heard some valuable contributions from my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), and the hon. Members for Newcastle upon Tyne, North (Mr. Henderson), for Blaydon (Mr. Anderson) and for Newcastle upon Tyne, Central (Jim Cousins), who rightly raised the uncertainty that the staff face. We do not wish to criticise that uncertainty and we share their pain, but they face a difficult and challenging future whether a private buyer takes it on, or the bank goes into administration or is taken into public ownership.
	We cannot expect a private buyer to be Mother Theresa or a knight in shining armour. There are difficult times ahead, and our argument is that taking the bank into temporary public ownership would be a way to provide some stability and a platform for progress. If hon. Members have any criticisms, they should be for the people who devised Northern Rock's business model, which, the Minister acknowledged today for the first time, had a major role to play in the downfall of the bank. However, I would ask who was responsible for supervising that business model and who set up the circumstances that enabled it.
	The focus of the anger of all the hon. Members who spoke so passionately about the effects on their constituents should be Adam Applegarth and the board of directors who so aggressively pursued an expansion plan that relied heavily not on retail deposits—the heritage of the bank—but on borrowing on the wholesale markets. Those hon. Members should also be angry with the Government for setting up the tripartite arrangement.
	The hon. Member for Louth and Horncastle (Sir Peter Tapsell) raised the issue of what happened when the Bank of England was made independent. However, the issue that he raised was not to do with that, but with who took on oversight of the banks. Perhaps if that had stayed with the Treasury, the tripartite arrangement might have been slightly clearer. Early warning signs were not picked up and acted on and the legislative framework was inappropriate. There was a delay in guaranteeing deposits, which stoked public concern, and some of the responsibility, ultimately, has to go back to the Government.
	Of course, the impact will be felt far more widely than simply in the north-east and among the beneficiaries of the Northern Rock foundation and employees of Northern Rock. Every single taxpayer has made a commitment. Labour Members said that it is about putting the Government first, but it is actually about saying that the taxpayer should be put first.
	 It being Seven o'clock , the debate  stood adjourned.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
	That, at this day's sitting, proceedings on the Motions in the name of Dr Vincent Cable may be proceeded with, though opposed, until a quarter past Seven o'clock.— [Alison Seabeck.]
	 Question agreed to.

Julia Goldsworthy: The shareholders are also taxpayers. If the average shareholding for a small shareholder is about £600 and the average tax contribution is £800, they are still net out of pocket. Their anger should be directed at those people who were delivering the business model.
	It is worth pointing out that the majority of shareholders are hedge fund traders, who do not invest in the long-term security. They invest in the short term, which does nothing to benefit the long-term viability of the bank. For many people, and potentially for the wider economy, there have already been significant consequences of the run on the bank. That raises two fundamental questions. Have lessons been learned, and could the Government have done anything better? There has been some acceptance of failure in the tripartite arrangements and in the regulatory framework. The Government sought to address some of that in the Queen's Speech.
	However, there are key issues where the Government still deny that there has ever been a problem. We just need to look at the loan. The Government are not following the principles laid out in their legislation on credit and savings that mean that the terms of the loan need to be laid out clearly. There has been no public debate on the interest rate, on how punitive it is, on how it has changed and on how it compares with the interbank lending rate. There has been nothing on the security of the loan.
	Another key area of failure has been the Government's delay on reaching an agreement on a private sale. The longer the debate goes on, the more public money is invested in Northern Rock and the less likely it becomes that there will be a viable takeover by a private organisation at the end of the process. Will the Government accept that they are undermining the viability of a private sale? Will they accept that they are in an incredibly weak negotiating position? Essentially, they are taking part in a poker game where they are showing their opponent the cards and playing with an unlimited number of chips provided by the taxpayer.
	Every week that goes by, the crisis is costing the taxpayer more money, there is less chance of a proper recovery, and it becomes more probable that the bank will have to end up in public ownership. The position is unsustainable, and that is why we say that the Government must bite the bullet. The least worst option is to take Northern Rock into temporary public ownership, with a view to selling it off later. That would surely be better than the proposition—which the Conservatives seem to support—that the Government would write unlimited blank cheques merely to avoid the dogma involved in taking the bank into public ownership. In fact, the tales of Rolls-Royce or the public mortgage bank that was referred to earlier show that the Conservatives have a record on these matters.
	Finally, why is the problem so urgent? All the options are on the table, but the Government must act quickly. If the bank has to be taken into public ownership, that has to happen quickly, perhaps over the recess, and that is why we suggest that enabling legislation should be brought forward now. Will the Minister who winds up the debate confirm that her officials have drafted that legislation, on the assumption that it will be needed sooner rather than later?

Angela Eagle: As my hon. Friend the Economic Secretary made clear at the start of the debate, Northern Rock faced specific difficulties earlier this year because of its reliance on securitisation and money markets for substantial amounts of funding. That funding then became more expensive and therefore more difficult to obtain.
	In September, it became clear that Northern Rock was having severe difficulty, and it was left with no option but to turn to the Bank of England. The Chancellor, on the advice of the Governor of the Bank of England and the chairman of the Financial Services Authority, authorised the Bank of England to provide special liquidity support.
	At the time, both the Leader of the Opposition and the shadow Chancellor supported the decision. The right hon. Member for Witney (Mr. Cameron) was quoted by  The Daily Telegraph on 16 September as saying:
	"We support wholeheartedly the action that the Bank of England and the Financial Services Authority are taking to provide liquidity to Northern Rock."
	On 20 September, the hon. Member for Tatton (Mr. Osborne) told Channel 4:
	"The guarantee put in place on Monday night was necessary, given the position we found ourselves in then."
	It was the right decision to offer support to Northern Rock, but that support must be seen through. It cannot be right to support the action taken by the Government "wholeheartedly" because it is "necessary", but then run away from the consequences as soon as the going gets tough. That is what the Conservatives did, and it shows that they are not fit to form a Government.
	The hon. Member for Fareham (Mr. Hoban) opened for the Opposition in the debate, but he was very touchy about his proposal for mortgage regulation. As those of us who read its report will remember, the economic competitiveness policy group had just advocated the total deregulation of mortgages, which the Leader of the Opposition welcomed as "impressive", "successful" and "fantastic". However, that no longer appears to be Conservative policy.
	The hon. Member for Twickenham (Dr. Cable) has shown that leadership appears to have gone to his head. He had a wonderful time with his speech: he described one of the private-sector consortiums seeking to buy Northern Rock as "vulture investors", called the Governor of the Bank of England impertinent and said that Richard Branson was engaging but had a criminal record. He added that Northern Rock was bleeding to death, in a bid to frighten anyone interested in keeping their money in the bank or in helping us to provide a solution to what is an extremely difficult problem. I shall restrict myself to observing that, by saying as much, he is not helping.
	The hon. Member for Twickenham said that there was a great deal of urgency about the need to tackle the problem, but then spent 40 minutes saying how urgent we had to be. We look forward to the new leader of the Liberal Democrats taking over next week, when we will be able to describe the hon. Gentleman as "Mr. Has-Bean".
	I want to spend a bit of time explaining the principles behind our support for Northern Rock, which has given the bank the opportunity to consider its strategic options for the future. First, the Chancellor has made it clear that the interests of the taxpayer must be protected. I know that it is a matter of concern for hon. Members that substantial sums of money have been lent that must be repaid at an appropriate time and rate. The Government will consider all options with a view to reaching the best outcome for the taxpayer. Other things being equal, we shall view favourably proposals that minimise any residual Government involvement or funding from the public sector.
	Secondly, we want to protect depositors. It is essential that we do everything we can both to safeguard their interests and to maintain the service provided to them. We shall view favourably any proposal that minimises disruption to the service provided to Northern Rock's customers. We expect proposals to include plans for communication with customers.
	Thirdly, any proposal must maintain wider financial stability. We shall, therefore, assess proposals to ensure that they will result in a substantial long-term capital structure that meets the tripartite authority's stability and policy objectives, and that there is a viable medium-term business plan. As my hon. Friend the Economic Secretary said earlier, the Chancellor has told the House several times that any outcome must meet European Union state aid rules. Any proposal for Northern Rock's future must meet the principles I have just set out, and it would have to be approved by the Government.
	I turn to the process of identifying a buyer— [ Interruption. ]

Question accordingly agreed to.
	Madam Deputy Speaker  forthwith declared the main Question, as amended, to be agreed to.
	 Resolved,
	That this House endorses the approach taken by the Government to Northern Rock to maintain financial stability, protect the interests of taxpayers and safeguard the position of depositors; welcomes the publication of a statement of principles underpinning the Government's response to proposals received by Northern Rock with regard to its future; acknowledges that Northern Rock has announced that it is continuing to explore a range of options as part of its strategic review; recognises that the Government continues to keep all options open in relation to the future of Northern Rock; and notes the Chancellor's assurance that he will keep the House fully informed of further developments with regard to Northern Rock.

Jessica Morden: I present this petition of more than 1,000 signatures on behalf of Deborah Harvey. She is one of my constituents and a former Farepak agent who has campaigned long and hard for justice for those affected by the company's collapse. The petition:
	requests that the House of Commons urges the Prime Minister to speed up the process of paying money back to the affected customers before Christmas this year; and further urges that if any culpability is found against any of the directors of Farepak that action will be taken and will he ensure that previous honours bestowed to them, if any, will be removed.
	And the Petitioners remain, etc.
	 Following is the full text of the petition :
	 [ The Petition of those affected by the collapse of Farepak,
	 Declares that the collapse of Farepak in October 2006 caused 122,000 people to lose their Christmas savings; that many families suffered financially and emotionally from that loss; and that they deserve reimbursement. Furthermore, it has been over a year since the collapse of Farepak and it is unlikely, according to the administrators, that any money will be paid back to its customers by Christmas this year.
	 The Petitioners therefore request that the House of Commons urges the Prime Minister to speed up the process of paying money back to the affected customers before Christmas this year; and further urges that if any culpability is found against any of the directors of Farepak that action will be taken and will he ensure that previous honours bestowed to them, if any, will be removed.
	 And the Petitioners remain, etc. ]
	[P000082]

Ian Gibson: I wish to put into context a few remarks about assisted reproduction. It is indeed a large-scale subject, which could take hours and days to go through, but several issues are important, particularly in respect of some of the legislation being introduced after the Christmas break. We have to consider some of those issues.
	Let me put the subject in context first. Figures published yesterday by the Office for National Statistics show that the population of the UK is growing at the highest rate since the 1960s and that total fertility rates have risen since 2001 from a record low of 1.63 children per woman to 1.84 children per woman in 2006. Indeed, it is interesting to note that they are now at the highest levels since the 1980s. In the 1980s and 1990s, the fertility rates of women in their '20s were actually declining. Since the 1970s, as more women have entered higher education and the labour force they have been increasingly delaying reproduction into their '30s or '40s and this has led, I think, to a greater need for assisted reproduction. That seems to correlate with the demand for assisted reproduction.
	The rise in fertility over the past five years, as reported by the statistics unit of the ONS, is a result—it says—of a large increase in immigration from abroad, as well as the increased support for child care and the maternity legislation introduced, of course, by the Labour Government. The ONS points out that some 20-odd per cent. of births were to people who were born abroad. There is some argument about that and its relevance, but it implies that immigration can develop fertility rates in this country to a higher level. That has yet to be shown over a period of time.
	The general trend in Britain towards a declining birth rate is mirrored in western Europe. Several factors, such as lifestyle factors, an increase in sexually transmitted diseases and a rise in obesity, as well as environmental factors involved in urbanisation and urban lifestyle that affect fertility, have led to a rise in male and female sub-fertility. There are also socio-economic factors, which have allowed couples, as I say, to delay having children. Lack of affordable housing, flexible and part-time career posts for women, and affordable and publicly funded child care have contributed to those low fertility and birth rates.
	Couples are delaying starting a family, which has led to a decline in fertility levels due to ovarian ageing and related reasons that have led to a reduced chance of conception. Other factors include tax increases, changes in national insurance and so on, but the main thing I am trying to point out is that the reproductive rates and the need for assisted reproduction are reflected in wider events in our society.
	However, I do not want to talk only about reproduction and social issues; I want to spend some time on the issues of scientific service and assisted reproduction treatments. I have a feeling that unless we are careful, the debate on the Human Fertilisation and Embryology Bill will get taken over by a lot of bioethical issues, as we saw in the recent debate in the Lords, and we will end up talking about regulation, rather than considering the new scientific endeavours that are coming forward. Of course we must debate bioethics—no one is against that—but I want to talk about assisted reproduction and some of the things that are happening.
	We talk about in vitro fertilisation, but in practice assisted reproduction is more than that. It includes all fertility treatments—ovulation induction, interuterine insemination and gamete intrafallopian transfer, as well as IVF. There are various ways to add eggs and sperm together to allow the conception of a child, yet we regulate only IVF. We do not consider whether the other ways of developing an embryo should be regulated. That is quite obvious in the Bill, which is lacking in that those other technologies are not considered. I guess we think that IVF will be the only treatment in the future. Because of that, we worry about the welfare of the children and about the need for a father—all these issues are being debated—but what about the welfare of the woman and the effects of treatments on her? For example, ovarian stimulation, whereby women are, in my opinion, overdosed with vast amounts of hormones, is being shown to be quite unnecessary. A single dose of a hormone or a reduced level can be just as effective in producing eggs and, at the end of the day, the embryo.
	In the regulation of assisted reproductive technologies, medical practices, laboratory practices and new technologies and research are all regulated by the Human Fertilisation and Embryology Authority, which has concentrated on those areas. There are inconsistencies in clinical protocols, the uses of drugs, dosages and practices. People, particularly women, are confused about the gross inconsistencies in clinical practices and they feel vulnerable. I think that the entire service should be delivered within the NHS, but I am not going to say that people are being forced into the private sector, to pay astronomical sums of money to receive any of those treatments, many of which have certainly not been scientifically studied or undergone proper clinical assessment.
	In my opinion, the Healthcare Commission has been efficient in regulating and monitoring clinical practices, looking at clinical complications, including morbidity and mortality, and taking effective action where necessary. Perhaps the Healthcare Commission should regulate IVF medical practice, with advice from the National Institute for Health and Clinical Excellence, the Medicines and Healthcare products Regulatory Agency and the royal colleges. We need an efficient and accessible clinical watchdog, but that is not proposed in the Bill at all. We are talking about legislation to deal with assisted inception involving IVF treatment, which is the mainstream clinical treatment, but we need a watchdog—a Government or parliamentary body—to address how it should be assessed and funded. Joining two bodies together seems to have been rejected, with a single body being put forward. We need to debate that. All those issues will have to be discussed in the debate on the Human Fertilisation and Embryology Bill, but I have my worries that that will not happen.
	My further worry is that people will tag on amendments to the Bill about abortion. I am quite prepared to stand and argue about the principles of abortion for days and days, as are other people; but if we are not careful, abortion will be tagged on to the debate through amendments and take it over, meaning that the issues that I am raising will not be reflected in the good legislation that all sides recognise we need, in terms of the outcomes of research and so on.
	We also want a clear and comprehensive presentation of information to the wider public. Term live birth rates should be a measure of success rates. League tables are published in  A Patient's Guide, but I think that it contains misleading information, and that detailed information about clinical trials should be included. Information about complications, morbidity and mortality rates per clinic should be published, not just success rates. The public need to know all that as well. It would be good if reports followed up what happened to the women involved and their children at different stages in their lives, but we do not have much information about that either.
	I think that if we are not careful, we will not get through all the issues that will be discussed when the Bill is debated. We will spend a great deal of time discussing all the ethical and moral issues surrounding the decision of same-sex couples to have babies, and we will also be expected to try and discuss abortion, which will be quite impossible. I think—and I hope the Minister will comment on this—that either a Joint Committee or a House of Lords Committee should consider abortion in its own right, taking account of all the evidence that is presented. I do not mean just scientific and medical evidence, but evidence dealing with the moral and ethical aspects. A House of Commons Committee was established, but examined only the scientific aspect. The issue should be seen as a whole in the context of the society in which regulations will be implemented.
	Will patients be charged for eggs? Will fees be charged for individual cycles? Will three cycles be necessary, or will one be sufficient if less hormone is needed for stimulation purposes? I initiated a debate on the issue in Westminster Hall a few months ago, when my right hon. Friend the Member for Doncaster, Central (Ms Winterton) was the Minister responsible for public health. I think she considered the points that I had made, and I should be pleased to hear whether there have been any developments in relation to reduction in the use of hormones which, in my opinion, seriously affect embryos and women's health. I believe that smaller doses could produce equally high success rates.
	That leads to the question of the number of embryos that are being implanted. We want only one to be implanted; we do not want multiple births and all the concomitant problems that may arise. According to Scandinavian countries, current technologies can be quite successful in developing a single embryo that proves healthy and able to bring satisfaction to people's lives. People want to have children, or to continue to have them, but for various reasons—which I have outlined—cannot have them. It is possible that infertility is more rife than it used to be.
	I want to say a little about survivors of cancer, particularly young people who receive severe treatment and whose ovaries may be damaged if it continues for a long time. It is their choice, or that of their parents or loved ones, but I think there should be a way of determining whether the sperm and egg should be stored for use in later life, after they have recovered. We had a ceremony today involving CLIC Sargent, which is involved in such cases. Thankfully many young people have recovered—survivorship is the name of the game for young people with cancer now—but many have been severely affected at one stage in their chemotherapy treatment, and the treatment may have damaged their eggs or sperm. We need a mechanism to ensure that if they want assisted-reproduction techniques to be applied to their sperm and eggs, those techniques are available. I do not think that such issues are entirely reflected in the Bill.
	Many people have drawn attention to the continuing problem of postcode prescribing. The way in which primary care trusts operate the technologies varies greatly—they are available in some areas but not in others—and I think we need a proper analysis of the position. We hear about drugs, but we should know more about the technologies. I am excited about all the new possibilities, and the way more people are being give the right to have children. However, when we are drawing up a human embryology Bill, we should ensure that it reflects all the developments that are taking place out there. We should not nit-pick when it comes to technologies. We should not regulate some and fail to regulate others. Hopefully we will not regulate some of them; self-regulation may be possible. However, I doubt that very much, when we still have strong private sectors in the health service and we are coming from a situation where assisted reproduction is still costing those who are rich and can afford it lots of money and other people cannot afford it and cannot have the treatments. That is a real challenge for the Government and these issues will come to the fore during the debate on human embryology. We must talk about it fully, and not just nit-pick. I speak as somebody who chaired the Select Committee that dealt with this issue, and who has the scars on my back to prove it. I also served on the Joint Committee. Everyone thought it was an interesting area to discuss, but they felt disquieted afterwards that many issues had not been touched on. I hope the Minister will pick up on that and be able to say whether we will be able to do a good job or an excellent job.